How a Brexit will play out: Jakobsen
- Leave is well ahead; it is leading by 700,000 votes
- BoE will most likely cut rates around lunch time
- The reaction of this cut will dictate next 48 hours – watch how policymakers talk
- Market will open on stop orders but should find balance early on
- The FTSE is likely to fall 7.5% on the future market, S&P by 3.8%....
- Fixed income will be very bid – US 10 and 30 yr yield is down 25 bps (massive)
- Club Med market will be more challenged than core Europe – with banks most likely being worst performing industry group
- GBP/USD as John Hardy pointed out pre-Brexit 1.3500 is critical…
- S&P very close to overnight LIMIT Down…at 1999.00
By Steen Jakobsen
Sterling takes a pounding
Hard landing for FTSE
100 SMA at 5811-00 (Futures at 5812)….200 SMA at 5585.00 and channel more important…
The EU and the European Central Bank
The European Central Bank will provide unlimited liquidity to its banking system and EU will “accept vote” and await UK invoking Article 50 in the Treaty.
Listening to the BBC all night this is the message: "Split country, scare mongering has turned voters from remain to leave, two fingers to Parliament, the broken social contract, the three main parties in the UK campaigned for Remain and failed……
"This is clearly a signal I have been trying to alert everyone about: The social contract has been cancelled by the UK voters and more so also with the EU. The deal [UK Prime Minister David] Cameron got started the two tier Europe, but now we have a fragmented Europe where the Super State is very difficult to imagine….."
David Cameron will announce his resignation timetable, but he will most likely remain in Downing Street to invoke article 50 and set up the negotiation team with the EU. Remember article 50 states two-year period plus a resetting of “relationship rules”…
The Brexit vote will give momentum to anti-establishment campaigns in Spain (which will have an election next week) and in France (which head to the polls in early 2017) and most likely confirm how even in the US, Donald Trump still has a chance..
– Edited by Robert Ryan
Steen Jakobsen is chief economist and CIO of Saxo Bank.