Will “Old Labour” emerge from the ashes?
I have been ahead of the pack here – already talk this morning in the papers is of forming new political parties in the UK. As I forecast, this is playing into my theme of increasing social division (bear market trait) and away from inclusivity (bull market).
I have a suggestion for the current Labour party. Just as Blair formed New Labour that veered away from the working-class roots into the centre ground that embraced the EU (a bit too enthusiastically, many would say as he brilliantly negotiated for a reduction in the Thatcher rebate!), why does Corbyn and supporters not splinter off and form “Old Labour“.
After all, that would only revert the party back to its original working class roots that so roundly rejected EU membership last week. And that would leave the Remainders to form their own party that would be the effective opposition in the new Brexit-lead government (in a coalition with Corbyn?). That would be something to behold!
A coalition between ultra-left wing Corbyn as leader of Old Labour and the pro-Brexit conservative (and Conservative) MPs. I would really enjoy that spectacle! I wonder how long that would last?
But seriously folks, as it stands the UK is ungovernable and whatever arrangement is cobbled together, nothing will be stable. We could become the banana republic many are saying (without the military rule, hopefully).
And England’s loss to Iceland (pop 323,000) in the Euro 2016 football tournament last night was simply confirmation that we are well and truly out of Europe!
And that instability is being mirrored in the FTSE which has been all over the map post-Brexit.
It has swung by hundreds of pips up and down in the space of a few hours. That is what I meant by increased volatility when I warned of it pre-Brexit. I expect a continuation of wild swings and trading will be especially tough. For most, staying away is probably the most prudent course for now.
Significantly, the German DAX was hit even harder than FTSE post Brexit.
and has now broken my tramline. Today the market is trying to rally to plant a kiss on my lower tramline and if successful, will herald another dropped shoe.
EU banks are already under great stress with Deutsche Bank in a perpetual bear trend. I believe Brexit will push many to breaking point with their boatloads of bad debts that will never come good. A renewed slide in the economies will create panic in the banking sector.
The omens for Germany are not good with its rapidly ageing population and a euro that is still too high (that Draghi is desperately trying to weaken). And this is the strongest EU member!
In the near-term, I see continued volatility with tricky trading conditions. This is no time to be a hero! Much of the ‘easy’ money has been made and it is time for us to enjoy our profits and watch the action from the sidelines in most (but not every) markets. Preferably on the beach!
