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Weekend reading: Deal or no deal we’ll do fine after Brexit says Capital Economics

Weekend reading: Deal or no deal we’ll do fine after Brexit says Capital Economics post image

What caught my eye this week.

Now we know that Russian bots were spewing nonsense about Brexit around the time of the EU Referendum, those harrowing days afterwards make a bit more sense.

Okay, so the level of involvement discovered so far seems modest. But wouldn’t it be nicer to believe that one reason most Leave voters found it so hard to articulate their reasoning was because they were native Russian speakers living in Volgograd?

Land of hope and folly

It’s no secret I think the decision to Leave was a huge mistake – especially weighed against the reasons many gave for voting that way.

Returning sole legislative authority to Parliament and reducing immigration were the only logical reasons to vote Leave. Everything else we still hear cited – inequality, the London-centric economy, globalization, the demise of ship building and mining, the bemoaning that there’s too many brown people on the High Street – won’t be solved by Brexit.

Yes, this is probably sour grapes on my part. Looking at the marvel that is the vaunted UK Parliament in action since the Referendum is almost enough to make me wish I’d voted Leave too.

How satisfying it must be to see our unshackled political leaders rally around at this time of great national need! To watch Britain bestride the European negotiations with Churchillian authority! To smirk at the perfidious and weak EU caving as predicted within mere days to our every demand!

Well no, none of that has happened. But we have had a Parliamentary sex scandal – and a nostalgic Carry On Cocking Up film is surely in the works for national release on Brexit Day.

A positive spin on Brexit

Enough of my cynicism. Food may lie rotting in the fields because immigrants are going home, banks may already be leasing office space in Frankfurt, and as a nation we may be clutching a red box containing £100 and a Tory intern’s photocopied mock-up of the new Blue British passport yet still desperately hoping the EU says ‘Deal’ – but not everyone is so gloomy.

Neil Woodford’s fund firm asked Capital Economics to produce a huge and hugely pro-Brexit piece of research entitled: Where Are We Now? and it’s a fairy tale for Brexiteers. A long one, too. It starts as an infographic but you can dig into a ton of sector-by-sector research.

I haven’t read every last page, but from what I’ve seen there isn’t a negative number inside. Except for a potential fall in net migration, of course.

To be fair Capital Economics is mostly looking at things from a ten-year view. As I’ve said before, I agree that on that sort of timescale the UK will appear to be doing okay. The economy will probably be smaller than it might have been – because free trade works – but there will be plenty of other things to blame. Both sides will probably be able to argue they were right.

But both sides won’t have been right.

Right now both sides were wrong. Remainers were wrong that the economy would crash – it hasn’t. Leavers were wrong that leaving would be a doddle – it’s a nightmare.

I hope Capital Economics has split the difference because the scenario it paints as its middle-case outcome is one I think most of us would bite the hand off a banker for right now.

From Monevator

Have you tried our new broker comparison tool? – Monevator

We now have two ways to help you to save money on platform fees – Monevator

From the archive-ator: A brief guide to the point of bonds – Monevator

News

Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

Household finances under strain as Nationwide warns of tough times ahead – Guardian

Chancellor urged to cut stamp duty in the Budget on Wednesday – ThisIsMoney

Mortgage costs would offset stamp duty cut, says study [Search result]FT

Homeowners with a mortgage end up with 15% lower private pensions – ThisIsMoney

Top of the market? A rediscovered Leonardo Da Vinci painting goes for $450m – BBC

Returns are almost never average – Vanguard blog

Products and services

Most banks have failed to pass on the 0.25% rate rise to their customers – ThisIsMoney

Number of untaxed vehicles in UK trebles after tax disc abolition – Guardian

Infrastructure fund investors spooked by Labour PFI plans [Search result]FT

If bitcoin were a country, its energy consumption would be 66th in the world – The Value Perspective

Criticism of index-tracking funds is ill-directed [Search result]The Economist

“I’m Hungarian and worked in the UK for eight years. Will I get a state pension or could I lose NI contributions after Brexit?”ThisIsMoney

Hargreaves Lansdown has hit the million customer mark – Hargreaves Lansdown

Comment and opinion

Saving rate and mortgage loan repayments – The Finance Buff

Every day is Black Friday for index fund investors – The Evidence-based Investor

If it doubled (quickly) then the US market might be in a bubble – The Brooklyn Investor

How to cynically raise $20 billion in the fund management business – The Reformed Broker

Saving for retirement: How much is enough? [Search result]FT

Even with low expectations, bonds still have their uses – Bloomberg

Chart crimes – The Irrelevant Investor

Dividends for life: 3 stocks you can trust [PDF]UK Value Investor

Guy Spier: How to build a career in money management [Video]YouTube

More (very lucid) thoughts on speculation versus investing – Gannon on Investing

Tesla’s truck is all about the journey – Bloomberg

Don’t worry about the flattening US yield curve [For nerds like me; you’ll need to zoom]Calafia Beach Pundit

Podcast Special

This is how a currency trader actually picks what to buy and sell [Podcast]OddLots

A selection of quality personal finance and investing podcasts – The FIREStarter

Talking of which, The Escape Artist is on the Choose FI podcast [Podcast]The Escape Artist

A chat with Robert Shiller, and various index fund matters [Podcast]Canadian Couch Potato

Meet the people who listen to podcasts at super-fast speeds – Buzzfeed

An intriguing interview with Claude Erb about markets, sequence of returns, gold, and much else [Podcast; sort of what I expect it to sound like when we pass the singularity and genius-level Artificial Intelligences appear on CNBC for a chat]Meb Faber

Off our beat

Manhattan retail: The new rust belt – Global Macro Monitor

On the (non) viability of start-up island nations [Search result]FT

Raze, rebuild, repeat: why Japan knocks down its houses after 30 years – Guardian

And finally…

“Most of the time the future is indeed like the past, and so extrapolation doesn’t do any harm. But at the important turning points, when the future stops being like the past, extrapolation fails and large amounts of money are either lost or not made.”
– Howard Marks, The Most Important Thing

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{ 54 comments… add one }
  • 51 The Rhino November 21, 2017, 1:43 pm

    @MB – but as TI says buying into non GBP assets effectively locks in the devalued pound issue (at least i think that’s what he saying). I can’t really action his advice on currency hedging as it’s getting too sophisticated for my simplistic investment brain to cope with.

  • 52 AncientI November 21, 2017, 3:53 pm

    @TI

    Thanks for that, its very hard to know where to put money at the moment if your currency is GBP , only 35% invested in foreign stocks at moment still 65% cash in the bank,

    Whenever I try to look for advice what to invest in UK companies wise all I see is talk about dividends and yields, no promising growth stocks/funds UK wise, id rather just invest in funds than try to pick stocks.

    Although I understand the argument with tracker funds its a boring way to invest ( and its still difficult to know which sector is going to do well )

  • 53 Grumpy November 21, 2017, 8:40 pm

    Siemens, the most blue-chip of German manufacturers, is cutting some 3,000 jobs in Germany, over 1,000 across Europe and nearly 2,000 in the US.

    At the same time, despite the company campaigning vociferously against Brexit and threatening to with withdraw future investment, it is now investing €39 million to expand its largest UK plant in Lincoln which employs 1,500 people…

  • 54 The Rhino November 23, 2017, 9:59 am

    Well that was a nothing budget.

    Is the problem with the housing market that homes for 1st time buyers are 1% too expensive?

    Fire v London s effort was more interesting. Amidst FvL s tax reforms part of me thinks maybe we should have a wealth tax as well, i.e. a % of net worth?

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