Our President’s Comments

1/15/19

Internal Markets Commentary

Brexit

  • The vote is due to take place after the debate finishes with votes on amendments coming first. In all likelihood the vote looks set to fail given that PM May has failed to secure the necessary support from MPs in recent weeks. There is an estimate at 20% probability of May resigning post the vote (or cabinet collectively withdrawing support) and an 80% chance of her staying on as leader. In the case of the latter, the government will have to provide an updated strategy by Monday after last week’s surprise amendment that voted to shorten it from over three weeks to three days.

1/14/19

Internal Markets Commentary

The Government Shutdown

  • Today marks the 24th day of the US government shutdown eclipsing the previous longest ever (21 days) seen in 1995-96. For markets the main inconvenience so far is the delay in some data releases. This Wednesday’s US retail sales release is the highest profile casualty to date data wise. Deustche Bank’s economists highlighted that the 2013 shutdown was calculated to have cost about 0.1% of GDP per week lost. However, at 850k furloughed workers, the shutdown over 5 years ago led to double the temporary losses of jobs than the current impasse has created. The overall economic impact should be minimal for now even if it is distressing for those directly impacted. However, the longer it goes on the more the lack of visibility on data will be a problem and the more it will start to make a meaningful impact on the immediate economic outlook.
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