As PM David Cameron sat down this morning to his first Cabinet meeting since that fateful rout on Thursday of ‘REMAIN’, my diseased ridden mind is working overtime in thinking that the PM and the Chancellor, who did really well soothing markets pro-tem ahead of the opening, are in the process of playing an absolute blinder in preventing ‘LEAVE’ and particularly Boris Johnson from officially formulating policies under the BREXIT banner. ‘LEAVE’ really must make plans to articulate the policies promised and attempt at a time table to implement them. How clever of the ‘Bullingdon Club’ to play ‘stone-wall Jackson’ tactics, which leaves the BJ camp powerless to satisfy or encourage their acolytes, despite the fact that ‘LEAVE’ seem split in terms of its commitment to the electorate. As I said earlier in the day, it would come as no surprise to me if Article 50 never was invoked. The only person who can trigger Article 50 is the PM.
I suspect George Osborne, having set down his REMAIN stall cannot expect to stay on as Chancellor or run as PM, despite the fact that he has easily the most acute political brain in Parliament. How could he be expected to implement ‘LEAVE’ policies unless there is a clever ruse to agree a free market agreement with the EU in the fullness of time? That would put the cat amongst the pigeons.
Initially Chancellor Osborne’s comments soothed the market’s furrowed brow, but the calming effect started to wear off a couple of hours ago. At 2.50am the FTSE 100 was down 2% – 122 points at 6017. The banks have continued to be clattered – Barclays down 15.5%, RBS down 15% and Lloyds down 9%. Even though these banks’ exposure to the EU in terms of passport requirements is minimal, investors have vented their spleens. RBS and Lloyds are all but domestic and Barclays’ greatest exposure outside the UK is in North America and Asia. There is also concern that if there is a recession banks are exposed to mortgage lending. Well I would say it’s up to the government to make sure there is sufficient infrastructure and stimulus spending to make sure there is no recession or that it is very shallow.
To add insult to injury, house builders have been friendless in the ring – in fact investors have been hostile – Persimmon and Barratt both down 20%. Land Securities are 10% light and easyJet has received the most vituperative treatment – down 23%. On Friday equities lost $2 trillion in value globally. The FTSE 250 has fallen 6.25% and the AIM by 35. The Pound has experienced a torrid session – Cable $1.32 and Sterling against the Euro has tanked €/£ 1.19. The fact that many FTSE 100 stocks (65%) account for their earnings in Dollars has prevented the FTSE from falling lower – Mining, oil, tobacco, drugs, cyclical stocks like Unilever and banks (HSBC). In the past two days the FTSE has fallen about 3.2% BUT on a Dollar related basis it is down markedly – the FTSE has fallen 17.4%!! THE DAX has eased by 2.3% and the CAC by 2.7%. The DOW is down 1.5% – 250 points at 3.15pm