Pound Jumps After Farage Promises Not to Contest Tory Seats

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Comments of the Day

12 November 2019

Video commentary for November 11th 2019

Eoin Treacy's view

A link to today's video commentary is posted in the Subscriber's Area.

Some of the topics discussed include: stock makets steady but China / Hong Kong pull back sharply, commodities ease, Treasuries pull back, cyclicals turning to outperformance.

Pound Jumps After Farage Promises Not to Contest Tory Seats

This article by Charlotte Ryan for Bloomberg may be of interest to subscribers. Here is a section:

The currencys focus on politics above all else was once again on show Monday, as the pound barely reacted to U.K. GDP growth, only to move close to 1% on the political developments. Strategists had said a coalition between the Brexit Party and the ruling Conservatives could have been the worst outcome for the pound, as Farages lawmakers would likely seek a more distant relationship with the EU and even push for a no-deal Brexit.

Still, though the news is positive for the U.K. currency, its not “a game changer,” according to Rochester. Even if the Conservatives were to keep all of their seats from last time, that would still mean a hung Parliament, and the Brexit Party still plans to stand in seats which were won by the opposition Labour party last time.

Eoin Treacy's view

Splitting the Conservative vote is the biggest risk to a market friendly outcome to the UK election. With the Brexit Party instead deciding to focus on Labour seats that removes a barrier to a Johnson majority. There is no doubt he is a divisive figure but he is also a personality that many voters can identify with. That increases the potential the next Parliament with deliver a much-needed majority.

The next 6 months favor Cyclicals: Financials, Energy, Industrials, Tech, Materials

Thanks to a subscriber for this chart illustrated report by Barry Bannister for Stifel which may be of interest.

Eoin Treacy's view

I have some sympathy with the view that when everyone is short, the risk of a short covering rally greatly increases. Thats particularly true if Saudi Arabia succeeds in encouraging OPEC to further reduce supply to bolster the valuation of Saudi Aramco ahead of the IPO.

Electric cars are changing the cost of driving

This article by Michael J. Coren for Quartz may be of interest to subscribers. Here is a section:

Its difficult to know how representative this data is of Teslas overall, given that Tesloops fleet is small, but it likely includes a large share of the highest-mileage Teslas on the road—several are nearing 500,000 miles. Finding conventional vehicles to compare is virtually impossible since most fleet cars are typically sold off after 100,000 miles.

But the implications could be huge. Every year, corporations and rental car companies add more than 12 million vehicles in Europe and North America to their fleets (pdf). Adding EVs to the mix could see those cars lasting five times longer—costing a fraction of conventional cars over the same period—while feeding a massive new stream of used electric cars into the marketplace. Whether the future of fleets is really electric, however, depends on the data. And thats still in short supply.

The promise of EVs
Most commercial vehicle fleets still run on gasoline and diesel, David Hayward, a fleet expert with Deloitte consulting, said. But EVs are top of mind. “Everyone is excited about it and everyone wants it,” he told Quartz. “But theres trepidation.” The poRead More – Source