Not but, because

The pound has enjoyed its strongest week against the dollar in seven years, but stock markets suffered a sharp fall amid growing concerns over a possible Donald Trump presidency.

FTSE and sterling are inversely linked at present. 75% of FTSE 100 revenue is not in sterling. Thus the value of those profits rises as sterling falls, falls as sterling rises.

Sure, there’re millions of other things which affect all prices, of course, but these past couple of months at least there’s been a pretty direct linkage between these two.

As I keep saying and almost no one else seems to be.

10 thoughts on “Not but, because”

  1. I think that was the standard argument from remain when the ftse was doing well after the referendum.

  2. Journalists don’t seem to understand the difference between “but” and “because”.

    FTSE has risen “but” sterling has fallen.
    Automation could save public sector millions “but” public sector employs lots of people.

  3. How will Remoaners and Climate Alarmists get the spotlight in a Donald Trump presidency? He will suck all of the oxygen out of the daily news cycle.

    Daily headline: Guess what President Trump did today !?!?

  4. Certainly the FT understands the correlation, but they would only ever put a negative slant on it – not surprising given that they are more or less the mouthpiece of the EU and that they’re writing for a soft-left Europhile readership who refuse to accept that the great unwashed has spoken and that we’re getting the fuck out of the EU no matter what legal or parliamentary contrivances they come up with. These sort of people never acknowledge what a superb corrective mechanism a free floating currency is, nor do they recognise the flip side of that with the economic and social dislocation in Southern Europe because of the straight jacket of the euro. There is also our host’s point that having more expensive imports will in time improve domestic productivity, which in the long run is what we all want, isn’t it?

  5. The FT was very very keen on the UK joining the Euro. Its editor also received the legion d’honneur this year, seemingly for being a good European.

    All newspapers have their biases and being wrong on the Euro doesn’t make them wrong on Brexit. But their pose as the disinterested voice of business is quite bogus.

  6. Not sure who your post was directed at but nobody’s talking about causation or actually making any big claims at all, simply that the market is calculating the value of future cash flows and discounting accordingly. And there has been a discernible pattern in valuations in recent months that appears to be currency related, you just need to look at the international earners at the top end of the market and compare them with the more domestically exposed mid/small caps.

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