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Corbyn's Plan to Stop a No-Deal Brexit Is Dead

That puts paid to the idea of a national unity government for now, unless Corbyn were to back down and accept another figure in charge (pigs will fly first). The various other blocking options, detailed in a column earlier this week, offer little confidence to those wanting to stop no deal either.

Deutsche Bank - Corbyn's Plan to Stop a No-Deal Brexit Is Dead

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Comments of the Day

16 August 2019



Video commentary for August 15th 2019


Eoin Treacy's view

A link to today's video commentary is posted in the Subscribers Area. 

Some of the topics covered include: nearly $17 trillion in negative yields, gold continues to rally, US 10-year at psychological 1.5%. stock markets steady but Europe weak, high yield spreads continue to expand 





Eoin Treacy's view

I will be travelling to Guangzhou and Taiwan between August 5th and 19th. I don't anticipate any issues with posting a limited Comment of the Day and Subscriber's video but I may be posting at odd times because of the timezone. If subscriber's would like to submit copy of general interest to the Collective we will be happy to publish it over the coming couple of weeks. 



Hot Spots

Thanks to a subscriber for this report from KKR which may be of interest. Here is a section:

What to do with China: Stay the course, but get more local. There are many reasons to worry about deploying capital in China these days. Geopolitical noise is high, with the recent intentional China currency weakening, the U.S. selling military equipment to Taiwan and Hong Kong poised to celebrate China National Day on October 1, 2019, more bumps in the road likely lie ahead. Moreover, the economy is now also clearly feeling the adverse impact of a decade-long debt stimulus program, and we believe that disinflationary forces are likely to keep a lid on pricing power. Finally, the ability to realize capital gains is becoming tougher as pulling capital out of China is now more difficult and/or seeking liquidity through the U.S. IPO market is likely to become more constrained.

However, China remains a core market where investors need to be active locally for several reasons. For starters, the shift we are seeing in technology – and the delivery of goods and services related to technology – is unlike anything else we see in any other market in the world. As such, we all need to learn more about and invest meaningfully behind these changes. In addition, given the rise of the Chinese millennial, we think that there is considerable money to be made as these 330 million individuals come of age.

Investors also need to work harder to better understand the rules of engagement to ensure that they are backing initiatives that do not conflict with the government’s agenda. Doing so will create significant opportunity because China still needs an increase in GDP-per capita to meet its stated 2020 goal of doubling total GDP since 2010. In our opinion, healthcare, food safety, travel, leisure, and wellness are all areas of significant investment potential, as they represent areas where the government wants and needs private sector support to continue to improve the quality of life for its population of approximately 1.4 billion.

Finally, given the uncertainty, we think that the opportunity to buy complexity at a discount is significant. Beyond just acquiring positions through the public markets (which is becoming a more relevant opportunity set for PE firms), our conversations in Beijing with senior executives lead us to believe that there is a forthcoming wave of deconglomeratization in China that could soon rival what we are seeing in Japan these days. Simply stated, multinationals are increasingly of the mindset that doing business in China as a foreigner is getting tougher, not easier. If we are even partially right, this opportunity could be quite meaningful to KKR’s Private Equity, Real Estate, Credit, and Infrastructure franchises over the next five to seven years, we believe.


Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area.

Private equity investors continue to salivate over the opportunities in China where there is a clear effort to become the world’s leader in new technology areas at just the same time that the USA is looking to combat the rise of its own technology sector. The question everyone has to wrestle with is the likelihood of being able to realise profits at some stage in future. That might be easier for private equity investors than public market investors but it is an important question nonetheless.



German Profit Warnings Signal Trade Woes May Trigger Recession

This article by Jan-Patrick Barnert for Bloomberg may be of interest to subscribers. Here is a section:

Industrial companies have fared worst during the second-quarter earnings season. Expectations for German businesses were comparatively low, but even so, only 41% of them managed to beat sales estimates. The ratio is well above 50% in France, Italy and Spain.

The consequences are starting to be felt. Unemployment rose by a total of 62,000 in the three months through July and demand for new workers continued to soften. That’s bad news for a country hoping to make up dwindling exports with consumption and investment. Domestic demand still supported the economy in the second quarter but that might change once uncertain prospects prompt companies and households to rein in spending.

Economists at Deutsche Bank AG and ABN Amro Group NV see Germany’s economy contracting again in the third quarter, pushing the nation in recession -- it’s first in six and a half years. Many more analysts say the risk of such a scenario has increased significantly after Wednesday’s report.


Eoin Treacy's view

Germany relies on the rest of the Eurozone and China for its exports. Europe is totally dependent on the ECB’s monetary stimulus for growth because individual countries cannot engage in fiscal stimulus or devalue their shared currency. With the measly LTRO program announced at the end of last year and reluctance to admit ending quantitative easing was a mistake, the EU economy is foundering and hitting Germany harder than most. China’s continued focus on the domestic consumer rather than heavy industry also represents a headwind for Germany



Corbyn's Plan to Stop a No-Deal Brexit Is Dead

This article by Therese Raphael for Bloomberg may be of interest to subscribers. Here is a section:

That puts paid to the idea of a national unity government for now, unless Corbyn were to back down and accept another figure in charge (pigs will fly first). The various other blocking options, detailed in a column earlier this week, offer little confidence to those wanting to stop no deal either. Probably the best chance, short of a change of government, is for the opposition to force through legislation that requires an extension of the deadline. House of Commons Speaker John Bercow would be instrumental in this and he seems to be bullish.

“I will fight with every breath in my body to stop that happening. We cannot have a situation in which parliament is shut down. We are a democratic society and parliament will be heard,” he told an Edinburgh festival audience this week.

Binary choices in politics are like truth serum. Theresa May offered her deal or said the country would head toward a no-deal exit. Lawmakers refused her deal. Offered the prospect of Johnson’s no-deal exit or Jeremy Corbyn in Downing Street, they again took a pass at the alternative. Perhaps they still believe a no-deal Brexit can be averted through other means, or else they are willing to accept it and go to an election laying the blame elsewhere (the government, parliament, the EU). Either way, it’s not very reassuring.


Eoin Treacy's view

It’s hard not to be disillusioned by the UK’s political impasse. If nothing else it highlights in bold terms that politicians are concerned about holding onto their jobs above all over factors. The best course of action in negotiating its exit from the EU was to push a Hard Brexit. It’s difficult to accept that so many politicians still cannot bring themselves to accept that fact even if they have no intention of following through on it.



Eoin's personal portfolio: crypto long increased July 15th 2019


Eoin Treacy's view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided. 



2019: The 50th year of The Chart Seminar


Eoin Treacy's view

The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO. 

If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected]  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

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