In his characteristically unique style, this morning Mint's Bill Blain has set his sights, and commentary, on the recent elections in the UK and France, the former of which he summarizes as a "FUBAR moment of monumental proportions" while the latter is - well, who knows, but "at least Macron has a plan."
His latest "Blain's Morning Porridge" note below:
France or the UK - A Tale of Two Cities... but mainly who is going to clear up?
“You have sat too long for any good you have been doing lately. Depart, I say, and let us have done with you. In the name of God, go!”
Markets are a function of politics and confidence. Politics boils down to a very simple equation: do people like you? Confidence boils down to the likelihood politicians will successfully make it better. Markets bet on the outcomes.
This morning we have a "best of times, worst of times" tale of two countries:
In one, a young exciting new leader is riding the electoral wave and looks set to gain a massive government majority at next week's second vote. He has a clear set of policies designed to reform a moribund state, stimulate employment and kick-start growth to restore his nation's pre-eminence in Europe. Labour reform is at the core of his policies.
Tick the popularity box, and tick the "we believe" the new programme might just work box. France has political and confidence upside.
In the second a tired and discredited political greasy-pole climber has tumbled off the wave and is drowning not waving. Her country is scrabbling to determine its future direction re Europe, struggling on social care and services, while business and consumer confidence is on a knife-edge in a most uncertain environment. The woman who won the election lost it, while the man who lost has sort of won.
It’s like a Shakespearian tragedy. She is cobbling together desperate deals to save her political hide.
Her chances of success are zero. "Dead woman walking" indeed. The big guns of her own party have her in their sights. She's trying to a deal with the repressive Northern Irish Taliban while simultaneously not upsetting the true heros of last week's election, the Scottish Conservatives.
If the leaks are to believed, then Theresa May has promised to do a Management, Leadership & Emotional Intelligence course 101 to learn how to listen to her colleagues. That train left a long time ago.Put big black crosses in the politics and confidence boxes. The UK is in serious trouble. Gilts, the currency and stocks just haven’t figured it all out yet.
Suddenly the confidence is melting. Brexit has become a black hole at the centre of British politics. Renewed uncertainty means a collapse in confidence is one the cards just as Brexit gets desperately serious. A collapse in confidence could herald economic disaster.
It’s not like anyone had a clue what Brexit actually meant anyway. The plan was essentially to "muddle through" - traditionally the default British approach to minor inconveniences ranging from lost dogs to Napoleon and Hitler.
But now the country is utterly disunited. We don't have a plan. Instead we've got every shade of political spin: apparently the election means Hard Brexit to some, Soft Brexit to others. Why not a four minute Brexit?: "hard on the outside, and soft and squishy in the middle.." Sadly it looks like we're heading for a Scrambled Brexit.
In Europe they are pissing themselves.. and Mr Barnier says they want to start negotiations now. Right Now.
In short it’s a FUBAR moment of monumental proportions.
What does it mean for UK and GBP markets?
The reality is we're about to start Brexit rudderless. While we've bluffed ourselves that Britain's superior trading position would see us right - now we're figuring jobs and growth are under serious threat unless someone seizes control and puts us on course pretty damn smartly. Remembers, it’s a function of politics and confidence. Both business and consumer confidence is going to be under threat unless this ruptured political picture sorts itself PDQ. New broom required.
Problem is - would you trust one of the current Tory leadership contenders to do so? Boris? Please. We should probably have a new law that Tories aren’t allowed to call elections or referendums…
Let’s go back to France - at least Macron has a plan...