Searching for sense and trends in oceans of data and information.

Brexit fallout begins.

Published 8.18.2016
LWRAS continues to monitor the fall out from the United Kingdom's (UK) vote to leave the European Union (EU).

Brexit factored into Moody's latest outlook report. Moody’s doesn’t think the UK will enter recession, but it will slow down. The rest of the EU is supposed to stabilize as well. The lower pound supports economic growth too. The prediction is for 1.5% growth in 2016 and 1.2% growth for 2017. No drop in housing prices is predicted, though this one might be failing even now, at least in London according to coverage I saw while in the UK.

The Moody's report covered more than Brexit. Moody’s outlook for China is improved too, with a prediction of 6.6% for 2016 and 6.3% in 2017. Of course, growth in China is particularly difficult to measure and predict since it is very much dependent on government manipulation— both of policy and numbers. Growth in the other G20 emerging markets is projected to be 4.4% for 2016 and 5% for 2017.

The US is seen as a risk factor. Moody’s wants the Fed to raise interest rates, because that would mean the economy is in good shape. Trump is not named, but is alluded to, as a big risk to the economy of the US. Read the rest.

Back from the Land of Brexit

Published 8.11.2016
As noted in the previous piece published near the end of July, the LWRAS editor recently spent ten days traveling around the United Kingdom (UK), visiting Wales, Scotland and London. Astute readers will note that two of those three places voted to "Bremain," only Wale voted to Brexit.

The trip was mostly a vacation, so political discussion and questioning wasn't the predominant theme, however, I could not miss the opportunity to try and learn what the reaction and opinions were in each place. Overall, the prevailing view is one of confusion and uncertainty. No one knows what's going to happen because there is no historical precedent to reference. The most obviously effect so far is the sunken value of the pound. As Americans traveling on holiday, we benefitted by that.

Note: Nothing that follows should be taken as definitive or as a statistically significant evidence. It's simply observations based both on conversations and media sampling while in the UK.


In Wales we visited with friends, and so I was able to ask the most questions. Wales was lovely and beautiful, but poverty was very evident. We were in Swansea, where the vote was for Brexit, in the capital city of Cardiff, the vote was actually for Bremain. The reason given is that Cardiff has more industry, and voters there were worried about the effect on exports.

The thinking conveyed in Wales is that Theresa May's selection of the very undiplomatic Boris Johnson to lead the Brexit negotiations was brilliant. May was not Brexiteer, and just like Cameron doesn't want to be responsible for the consequences of the fallout. Of course, as Prim Minister she will be responsible, but this way one of the lead architects is forced to deal with the issues he helped create.

It's also clear that not everyone thinks that Brexit will actually occur, that the effect of the of negotiations will be to change people's minds. LWRAS maintains its position that Brexit will happen. Read the rest.

Final Brexit Update for July

Published 7.21.2016
LWRAS continues to monitor the Brexit process in the United Kingdom (UK), as it will have implications on markets in Europe and beyond. This will be the final update for July, as the editor will be traveling to the UK to check out the scene on the ground, as it were. However, no further commentary, or for that matter any other content, will be published at this site until after the return home.

Most of this look at the Brexit process will focus on the initial moves of the newly minted Prime Minister (PM) Theresa May. We begin with the new PM's early moves. For reasons that escap ethis obserever, May made Boris Johnoson Britain’s top diplomat. In doing so, she assures that he’s not writing poison articles in his weekly column in the Telegraph about her, and apparently it will take him out of the country quite often. The Europeans are not pleased, and the US didn’t seem thrilled at all.

So… she’s forcing him to face some of the work to get this done— or she’s hoping that he’ll fall flat on his face and be done for the duration. Europeans and others are already saying he lies (because he did in the Brexit campaign). Johnson is finding it hard to get past his previous comments. Rather than apologize, he just wants to move on.

Johnson was clearly not surprised by the questioning on his past remarks from the British and U.S. media. He tried to brush off the first couple of questions with a prepared answer but became more irritated.

He did get a break from Kerry, who said the U.S. ambassador in Brussels had referred to Johnson as a "very smart and capable man". Kerry added: "That's the Boris Johnson I intend to work with.”

"I can live with that," said a rather sheepish-looking Johnson, prompting Kerry to reply: "It's called diplomacy Boris."

Unsurprisingly, May's first trip was to visit Scotland's First Minister. The Scots voted overwhelmingly to "Remain" and they have a huge chunk of money that was promised to them by the European Union (EU) and which is now at risk with Brexit.

No surprise, May has no intention of giving Scotland another vote to leave the UK, but she did say she was willing to consider ways to protect Scotland's interactions with the EU. Read the rest

No glut in oil, now there's a gas glut?

Published 7.14.2016
LWRAS periodically considers the condition oil market as energy is a critical factor in determining the condition of the global economy, as well as individual countries national economies. Recently, the price of oil has rebounded a bit to around $50, though since Brexit, it has decline to $45 per barrel. In mid June, the rig count in the US had begun to increase after months of decline.

So has a bottom been reached in the oil market? Schlumberger thinks so. Or rather, it thinks a bottom is being approached. Revenues are still declining, but at a slower pace.

Or is oil going to $10? That’s what Gary Shilling thinks. He thinks the world is still awash in crude, though he doesn’t call it a glut. Shilling thinks the price increase isn’t related to fundamentals. Fracking is now the swing producers — meaning that it only gets produced when the price/market demand supports it. That was one of the Saudis' goal.

Unrest in Venezuela, Nigeria and wildfires in the oil sands of Canada are pinching supply. Shiller thinks OPEC* can no longer control prices. The Saudis still want to protect their market share, so they don’t care who gets hurt (that’s not news, of course, just a statement of the obvious). The fact that the Iranians want to produce as much as they can is not new either. Read the rest.

What a difference a weekend makes

Published 7.11.2016
The big news this Monday morning is that Britain has a new Prime Minister (PM), and much more quickly than anticipated. The reason for the quickened pace of change is that her remaining competition (the back stabber Gove having been eliminated), Andrea Leadsom, torpedoed her own campaign this weekend with a statement about how she'd be better than Theresa May as PM because she's a mother and May is not.

In 2016, at least in the United Kingdom (UK) Tory Party, politicians pay a price when they make stupid statements or do stupid things. Boris Johnson isn't going to be the next PM because Gove realized that there wasn't any substance behind his buffoonery and so took him out. Gove isn't going to be the next PM because you can't stab people in the back and then expect them to trust you. And finally, this past weekend, we have Leadsom, who stupidly chose to invoke that age old animosity between mothers and working women.

In the end, Leadsom claimed she was dropping out to speed the process, and a quicker change should remove at least some of the uncertainty surrounding the UK's future. Perhaps Leadsom just did the math and realized that there wasn't a path to victory— at least not one that included women who weren't mothers who vote.

Across the Pond Contrast

In the US elections, of course, there doesn't seem to be the usual price to pay for stupidity, verbal or otherwise. Donald Trump mocks a disabled person, regularly trades in racist tweets, and is seemingly clueless when it comes to actual policy but pays no price within his party. Clinton's choice to use a private email server for her official government work was stupid and then some. But for her party, singular issue was whether or not she was indicted. She was not, and so her campaign moves on. Read the rest.

Continuing Brexit Coverage

Published 7.6.2016
Continuing to collect and consider information related to Brexit, because the only way to increase your knowledge about something is to read all you can from all sides. The intent will be to collect links and present notes once a week, though that will change as warranted.


Boris Johnson's career is likely over. He lead the "Leave" campaign, damaged the Tory party, destabilized the country, and then quit without attempting to fix any of it. Though many don’t think he could fix it— he doesn’t have the skills. The author compares him to Bill Clinton in terms of political skill— but Clinton wasn’t lazy, whatever else you want to say about him. Johnson frankly sounds more like Trump— in fact, he's also a TV celebrity.

The Economist (which back Remain) sees a country adrift; the campaign was supposed to “take back control” but instead the country is “off the rails.” The pound has stabilized, but is still down about 30%, but the markets (which, as J.P. Morgan famously said, tend to fluctuate) have returned to pre-Brexit levels.

There is some buyer remorse, but It doesn’t matter that 4 million people signed a petition for another vote— 17 million voted “Leave” Come back when you hit 18 million for a re-do. The hope seems to be for a Norwegian arrangement, which would make it less likely that Scotland would secede.

Northern Ireland and the border is going to be a headache too. Brexit breaks the Good Friday Agreement of 1998— which was underpinned by the EU. Peace for 20 years at risk just like that. In Northern Ireland, the vote split along religious lines. Protestants votes leave, Catholics voted remain.

The Economist thinks the Tories should choose a Brexiteer and allow him/her to explain to the 17 million why it was a pack of lies. It also thinks Britain should delay for as long as possible invoking article 50. They are hoping that as the cost of Brexit sinks into the national consciousness that more people will support a “fudge” — meaning the UK would “leave” but not really. That’s what Cameron tried to negotiate prior to the vote, but the EU basically said “forget that” after the vote.

Because the vote was close, the Norwegian route might be more popular— but the Norwegians have to follow the EU rules when it comes to products and freedom of movement. Stemming the freedom of movement was a big part of why Brexit won. Read the rest.

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