Meanwhile, central bankers around the world are bracing for the potential fallout from volatile currency, stock and bond markets. It should be quite a show.
Unlike our elections this November, where CNN and FOX will be tripping over each other to declare an early winner before U.S. polls even close, we’ll have to wait patiently for the outcome of the Brexit vote.
The British do things by the book, after all.
While there will be plenty of speculation about the vote throughout this evening, polls don’t actually close until 10 p.m. local time and the vote counting doesn’t begin till after midnight in London.
|It’s decision day in the U.K.|
Throughout the wee hours of Friday morning, results will trickle in from different regions of the U.K. And with the outcome too close to call already, we may not know the final verdict until just before financial markets open in New York.
This event is tailor-made for around-the-clock foreign-exchange markets. And you can bet that die-hard forex traders from the big hedge funds to retail currency players will be busy pulling all-nighters.
George Soros, who famously “broke the Bank of England” decades ago betting against the British pound, has warned the currency could collapse 20% if the “Leave” vote prevails.
The yen, euro and dollar will also be in play. Global stocks, bonds and commodities will also be turbulent in the wake of the vote tally, perhaps with sharp moves in both directions.
At the end of the day, the Brexit brawl will pass into history just like the Grexit drama before it. What will remain is the sad state of affairs within the EU.
Populists all across Europe are agitating for independence from the bureaucracy (some would say tyranny) of Brussels. The fact that a nation as large and important as the U.K. would even bring it to a general referendum is damaging enough.
British billionaire Peter Hargreaves put it best in a recent Bloomberg interview when he said: “Every year in the EU, it gets more political, it gets more legislative, more regulative; we don’t seem to get very much benefit from it … when there were only nine countries (in the EU) it was 30% of the world’s GDP, now there are 28 and it is only 17%.”
|“Talk about a union that has lost its way!”|
Talk about a union that has lost its way! No doubt he will be casting his ballot to “Leave”!
Never fear, the European Central Bank (ECB) stands ready with abundant liquidity to counter any potential Brexit shock. But as is typically the case with central bankers, it’s peddling the wrong medicine.
And, the Bank of England made $3.5 billion in liquidity available to U.K. banks last week, just in case.
Plus the ECB’s quantitative easing campaign has pumped 800 billion euros worth of excess liquidity into the eurozone as a whole.
But the EU isn’t suffering from a lack of liquidity … it’s a fundamental lack of solvency that is at issue. Because many of its biggest banks, and individual member states, are practically bankrupt already.
And when confidence is finally lost, no amount of central bank money-printing will be enough to paper over the crisis that will surely follow.
Remember the days when it seemed OPEC ruled the world? Things are much different these days, as indicated by the oil cartel’s finances. The 13 member countries saw oil export revenue slump to the lowest level in a decade last year. Revenue declined more than 45% to $518 billion in 2015. Crude prices fell 35% last year. OPEC countries had a combined current account deficit of nearly $100 billion in 2015 (vs. a surplus of $238 billion in 2014). Saudi Arabia had the biggest current account deficit of more than $41.3 billion.
The Asia-Pacific region’s private wealth topped that of North America for the first time, according to a report by Cap Gemini. The assets of millionaires in Asia-Pacific countries jumped 10% to $17.4 trillion, topping North America’s $16.6 trillion. Wealth in Europe increased 4.8% to $13.6 trillion. Overall global wealth rose 4% to $58.7 trillion. According to Bloomberg News, China’s millionaire population rose 16%, the biggest rise in the survey. Nevertheless, the U.S., Japan and Germany have more high-net-worth individuals than does China.
Nearly 70% of voters say they think Republican presidential candidate Donald Trump should step down as chairman and president of the Trump Organization while he’s involved in politics, a new CNN/ORC Poll finds. It breaks down to 56% of Republicans, 71% of independents and 77% of Democrats saying he should step down. Even 55% of those who say they would vote for Trump against Hillary Clinton say he should step aside while his career in politics continues.
Should Trump give up control of his businesses while running for president? What should he do with his businesses if he wins? Comment on that matter or anything else below.
The Money and Markets Team