So it was no surprise that, chafing under the yoke of European bureaucracy, the Brits decided to stage a referendum on leaving the European Union.
The “Brexit” vote — as it’s now being called — is set for June 23 and, for a while, it looked like the Brits could actually go through with it. The “Leave” vote was leading the “Stay” by a couple of percentage points, and markets went into shock, sending sterling below the 1.4000 level in panic selling.
The idea of unshackling its society from the endless reams of regulation emanating from Brussels has a certain sense of political romance and certainly some sympathy even among the most ardent Eurocrats. But the cold, hard reality of life is that an economic exit from a union of 500 million consumers would have devastating consequences for the UK economy.
|Will London and the rest of the UK separate itself from the EU? Polls indicate a Stay vote, but passion remains with the Leave crowd.|
The UK Treasury estimated that GDP could lose 10% in growth over the next few years, and some of the more dire forecasts suggested that GDP would contract by 8% in the first year of independence alone.
Little wonder, then, that after flirting with the idea of independence, the Brits are slowly coming to the realization that they must remain in the EU.
The latest poll suggests that the Stay campaign is nearly 10 percentage points ahead. But perhaps the clearest indication of the confidence of the market is the fact that sterling has rallied nearly 250 points this week and looks ready to challenge the psychologically important 1.4500 level.
So — is Brexit a bust? Perhaps, but there are still 17 million Britons undecided, and June is a long time away. In politics, anything can happen and public opinion can change in a flash.
For now the Brits appear to be voting with their wallets rather than their hearts. But the passion in the debate is clearly on the side of the Leave vote, so the unexpected could still occur.
Since currencies are political as well as economic assets, the placid rise in the pound can change in a heartbeat if the markets sense that there is any threat of a Brexit.
That’s why I remain short the pound as we watch the day-to-day machinations and sentiment changes develop. I believe it’s a limited-risk trade that could pay off big if the Brits surprise the world.
Visa is vowing to reduce the amount of time it takes for customers to pay with its new chip-embedded credit cards.The company said it is upgrading software that will allow consumers to insert and remove the card in two seconds or less.
Currently, users must keep the card in the card reader until the transaction is complete. Current transaction times are up to 10 seconds on average, CNN reports, citing a study by merchant services provider Harbortouch. Consumers that have become used to simply swiping the magnetic stripe on the back of the card have complained about the time it took to use the new chip. Visa insists the new process should “make the checkout experience comparable to the ease and speed of magnetic stripe transactions.”
The tech industry dominates a new ranking of the top-paying U.S. companies, The Wall Street Journal reports. Companies including Alphabet Inc.’s Google, Facebook Inc. and Twitter all pay median compensation of at least $150,000 a year, according to a study by online career site Glassdoor Inc. Techs make up 20 of the 25 highest-paying companies in the U.S. this year, Glassdoor data shows.
In 2015, data for the 15 highest-paying companies in the U.S. showed many of the same tech firms ranked on the list, although salaries were lower. Some big names didn’t make the cut. Apple and Amazon.com figures were lowered on average because their employee bases also include retail and warehouse workers, which bring down the companies’ median pay. Yahoo also wasn’t among the top 25 companies, with its median compensation at $129,940.
Mitsubishi Motors Corp. said its workers improperly manipulated fuel-economy data on at least 625,000 vehicles. “We express deep apologies to all of our customers and stakeholders for this issue,” Mitsubishi said. Major car makers worldwide have been caught making inaccurate fuel-economy and emissions claims. In 2014, South Korea’s Hyundai Motor Co. and Kia Motors Corp. agreed to pay penalties for overstating fuel-economy measures in the U.S., The Wall Street Journal reports. Since last year, Volkswagen AG has been embroiled in a scandal involving devices used to produce inaccurate emissions data in the U.S.
The Money and Markets team
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