/ The extent of the disaster capitalism explained

Please Register as a New User in order to reply to this topic.
john arran 11 Sep 2019

An ... erm ... 'interesting' result of an investigation into the extent of shorting the pound and the relationship between those doing so and those pushing for a disastrous Brexit at any cost:

https://bylinetimes.com/2019/09/11/brexit-disaster-capitalism-8-billion-bet-on-no-deal-crash-out-by-boris-johnsons-leave-backers/

Of course it turns out that, although it would be an enormous cost to the country, it also would be an enormous windfall for those desperate to impose it on the British people. No wonder they're so keen to avoid a confirmatory referendum.

From the article:

"From the financial data publicly available, Byline Times can reveal that currently £4,563,350,000 (£4.6 billion) of aggregate short positions on a ‘no deal’ Brexit have been taken out by hedge funds that directly or indirectly bankrolled Boris Johnson’s leadership campaign. 

"Most of these firms also donated to Vote Leave and took out short positions on the EU Referendum result. The ones which didn’t typically didn’t exist at that time but are invariably connected via directorships to companies that did. 

"Another £3,711,000,000 (£3.7 billion) of these short positions have been taken out by firms that donated to the Vote Leave campaign, but did not donate directly to the Johnson leadership campaign.

"Currently, £8,274,350,000 (£8.3 billion) of aggregate short positions has been taken out by hedge funds connected to the Prime Minister and his Vote Leave campaign, run by his advisor Dominic Cummings, on a ‘no deal’ Brexit."

Report
Lusk 11 Sep 2019
In reply to john arran:

What percentage of the population, in your opinion, has the slightest inkling of what any of that actually means?
Just looks like a load fancy financial terms and lots of big numbers to me.  Meaningless. And why should I, or any other typical person be expected to understand it?

Report
MG 11 Sep 2019
In reply to Lusk:

It's fairly simple, isn't it?  

Summary:  Lots of people have placed large bets that the pound will become worth less.  The same people have actively supported brexit and key figures such as Johnson and Cummings.  As such, those leading the country are probably motivated by ensuring the pound loses value, rather than the good of the country.  

A bit like a jockey betting against his horse  - he'd be unlikely to put much effort in to it winning.

Report
Yanis Nayu 11 Sep 2019
In reply to Lusk:

Boris Johnson, the PM, somebody supposed to be acting in the national interest, is pushing like a man possessed for a no-deal Brexit having been funded by people who stand to make billions out of that scenario. 

You and me, however, have paid him nothing. He is not acting for us, he is acting for them. 

He who pays the piper calls the tune. 

Report
john arran 11 Sep 2019
In reply to Lusk:

You're right. What we need is a national press to tell the story in layman's terms without seriously distorting it for the political advantage of their proprietors.

It will be interesting to see if this gets any prominence at all on any TV station other that Channel 4. I'm not holding my breath for a headline piece on the Beeb.

Report
tjdodd 11 Sep 2019
In reply to Lusk:

Some rich tossers have heavily bet on no deal and stand to make billions if we crash out. They have bankrolled Boris to ensure no deal. Whilst the rest of the country suffer for years. A pity the daily mail didn't report this to their informed readers.

Report
john arran 11 Sep 2019
In reply to john arran:

And as if that wasn't enough. Apparently the Yellowhammer document the government has been forced into revealing; you know, the one that purported to be a baseline scenario but senior tories were keen to portray as a worst-case scenario. The one that was leaked to the Sunday Times last week but dismissed by Gove as being old.

Well it turns out to be identical to the leaked version, except for one important detail. Where the subtitle of the leaked version clearly stated "BASE SCENARIO", the version the government has now chosen to release now says "HMG Reasonable Worst Case Planning Assumptions"!

How much more of this nonsense can Leavers take before they finally admit they've been played and continue to be played?

Report
Shani 11 Sep 2019
In reply to john arran:

PostmanPat will be along shortly to ask what evidence you have that anything illegal has occurred .

Report
jkarran 11 Sep 2019
In reply to Lusk:

> What percentage of the population, in your opinion, has the slightest inkling of what any of that actually means?

> Just looks like a load fancy financial terms and lots of big numbers to me.  Meaningless. And why should I, or any other typical person be expected to understand it?

I bet you do. Still rooting for 'brexit'? 

Jk

Report
Route Adjuster 11 Sep 2019
In reply to john arran:

If you are shorting your own currency,  what currency do you do it with?  Messing with my head that one.

Report
MonkeyPuzzle 11 Sep 2019
In reply to Lusk:

When you figure out what it means, consider it alongside this kicker from the government's own impact assessment: "Low income groups will be disproportionately affected by any price rises in food and fuel".

It's a fabulously enticing brochure for Brexitland.

https://news.sky.com/story/operation-yellowhammer-government-no-deal-brexit-documents-released-11807339 

Report
TobyA 11 Sep 2019
In reply to jkarran:

The article is very superficial though. It points to a correlation but even itself doesn't seem to argue for causation - perhaps they just know they can't show that.

Who in this hedge fund world donated to Hunt? Or Stewart? Or any of the others? How do we that donations to Johnson had any impact on him winning (it notes funding is capped so all candidates have an equal chance). What other positions were companies taking at the same time as taking short positions? Surely that's just part of a wider hedging policy?

Perhaps there's a real story here, but if there is I suspect it will be the Guardian or the Economist of the FT that can really show what is happening. These kind of articles seem to be our own British version of Trump derangement syndrome

Report
TobyA 11 Sep 2019
In reply to Route Adjuster:

Aren't they in effect just big bets, so presumably just in another currency. Dollars most likely.

Report
Postmanpat 11 Sep 2019
In reply to Shani:

> PostmanPat will be along shortly to ask what evidence you have that anything illegal has occurred .

>

  An unreasonable question?

  Is there a survey of how many remainers are long sterling?

  Incidentally, where is the data actually evidenced?

  Do people understand that, although most hedge fund managers will have a substantial proportion of their own money in their funds, they are mainly running the money for third parties. If a third party wants their money managed by someone who wants brexit and believes that it will happen , is it is not appropriate that the fund manager reflects that view?

  The most interesting thing about this obsession is that otherwise rational people think that a few funds taking a punt on their strongly held views is some sort of grand conspiracy. It's called "putting your money where your mouth is" . It's not exactly a secret. Hedge funds like Odey and Marshal Wace declare their key exposures. Just silly really.

Post edited at 23:02
Report
freeflyer 11 Sep 2019
Timmd 11 Sep 2019
In reply to Postmanpat:

Without (being seen to be) taking sides, I got the impression that Shani had morality in mind as being more important than legality?

Post edited at 23:41
Report
Ian W 11 Sep 2019
In reply to Route Adjuster:

Any really, but almost certainly the Dollar, with the Euro as a decent each way bet.

Report
Bob Kemp 12 Sep 2019
In reply to Postmanpat:

You're missing out an important part aren't you? The point is that a number of the people doing the shorting are donors to the Tory party, and to Johnson's leadership campaign fund. Are they buying influence? I wouldn't know but this does look rather too cosy. 

Report
Lord_ash2000 12 Sep 2019
In reply to john arran:

"The extent of the disaster capitalism explained"

An £8.3bn short on the pound, that doesn't sound like a big deal to me. How many billion is short on the pound on any given day before the whole Brexit thing happened? And how much do you think they'll even make in this, 20% maybe if they got in early. It's a few billion tops, pocket money compared to what goes through the London finical system on any given week.

Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

> You're missing out an important part aren't you? The point is that a number of the people doing the shorting are donors to the Tory party, and to Johnson's leadership campaign fund. Are they buying influence? I wouldn't know but this does look rather too cosy. 


That is true of any political donor so it doesn't appear to be at the core of Shani's point in this case.

I wonder if he is equally outraged by Gina Miller spending large amounts of money trying to keep the UK in the EU whilst holding investments in her funds which will benefit from that outcome?

Report
Bob Kemp 12 Sep 2019
In reply to Postmanpat:

I wasn’t talking about Shani’s comment. I was talking about your response not mentioning the key issue in the article under discussion. 

As for mentioning Gina Miller, that’s classic whataboutery, with added smearing. 

Report
MG 12 Sep 2019
In reply to Bob Kemp:

> As for mentioning Gina Miller, that’s classic whataboutery, with added smearing. 

And in any case, she hasn't been bank-rolling judges, which would be the accurate analogy,

Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

> I wasn’t talking about Shani’s comment. I was talking about your response not mentioning the key issue in the article under discussion. 

> As for mentioning Gina Miller, that’s classic whataboutery, with added smearing. 


It's not whataboutery. It's a valid question as to what Shani is actually so outraged about.

  There are at least two things here: political donations-which most parties benefit from.

  Investment positions benefiting from a specific outcome on the part of people who support, financially or otherwise, that outcome.

  I am trying to understand what Shani (or you) think is unique about the cases in the article (which,incidentally)  don't seem to be properly evidenced or even very big)

Report
MG 12 Sep 2019
In reply to Postmanpat:

>   I am trying to understand what Shani (or you) think is unique about the cases in the article (which,incidentally)  don't seem to be properly evidenced or even very big)

Who said anything about uniqueness?  But since you ask, and taking the allegations at face value, how about an unelected Svengali advisor to the PM who appears to basically be running the show being the beneficiary of large financial gambles if very destructive and significant foreign policy decision is made.  I don't recall that being the case previously.

Report
Postmanpat 12 Sep 2019
In reply to MG:

Lol. Do you actually believe that?

Report
DancingOnRock 12 Sep 2019
In reply to TobyA:

As far as I understand, shorting involves promising to sell something in the future you don’t actually have now at a price you fixed now, hoping the price drops and you can buy at a lower price with the money you have been promised.

So you sell an apple for the current price of £1.

But you don’t have the Apple. 

The price of apples drops to 50p.

You then buy an Apple for 50p and give it to the initial buyer. You make 50p profit. 

If the price of apples goes up, you make a loss. 

The pound has been overvalued for years and the value kept artificially high, despite attempts to bring it in line with it’s true value, which the Brexit vote managed to do practically overnight. 

Currency traders are doing this all the time with different currencies. Whether it’s moral or not is another question, people who short can also go long, so I suspect that these people were ‘hedging’ their bets while everyone else was predicting a Remain win. How anyone actually engineered a win for Leave is the stuff of conspiracy theories. I wonder how many people should be up in arms if they knew how much was made when the pound increased in the past. 

Report
MG 12 Sep 2019
In reply to Postmanpat:

Believe what? 

Report
neilh 12 Sep 2019
In reply to john arran:

It is still an interesting piece of research.

And at the same time there there is alot of talk about the £ strengthening after the no deal. It would be interesting to see what those same people hold as positions on that!

Probably another £ 8 billion to balance their short postion.

Report
MG 12 Sep 2019
In reply to DancingOnRock:

> The pound has been overvalued for years and the value kept artificially high

Curious about your basis for saying this.  What does overvalued mean?  Surely the value is what people will pay for it?

Report
DancingOnRock 12 Sep 2019
In reply to MG:

Quite. In the same way as a house is valued at what people will pay for it?

There are other factors at work that value a currency. What has changed in the UK to mean the pound has fallen? Absolutely nothing tangible. We are still trading as before. GDP is up. Employment is up. Growth until the last quarter was up. The drop in its worth is due purely because of supply and demand in the currency markets. 

Report
DancingOnRock 12 Sep 2019
In reply to neilh:

There will be people going long. Just not many of them at the moment. If there were then the price would be going up. The people who shorted the pound will have money tucked away now. As soon a confidence in the future returns, they will be buying. That confidence could be anything that signals the direction we are going. Revoke, deal or no deal. It doesn’t matter. As soon as we know what the future arrangements are we can deal with them. Uncertainty is the major issue here. 

The secret is to predict, like when buying a house, when the market has hit the bottom and is about to rise. 

Post edited at 10:15
Report
In reply to john arran:

Not a lot different to what Soros did on black wednesday and he's now using those profits to fund pro EU campaigns...so probably net fair? ;-)

Report
In reply to DancingOnRock:

They would have either sold spot or forward or used options. Shorting GBP using options though is very expensive right now because its a flooded market so premiums are high. Selling forward is probably the cheapest as cost of carry is less than funding selling spot. 

To the OP ...I find this statement "The firms that have taken out short positions over the past six months are almost entirely dominated by those which either directly, or through their directorships of other companies, also donated to the Vote Leave campaign in 2016 and were involved in taking out short positions on the referendum result." almost completely unbelievable. People are shorting sterling all over the world, from day traders spread betting to hedge funds and investment banks to businesses hedging currency etc. 

Report
Ian W 12 Sep 2019
In reply to DancingOnRock:

> Quite. In the same way as a house is valued at what people will pay for it?

> There are other factors at work that value a currency. What has changed in the UK to mean the pound has fallen? Absolutely nothing tangible. We are still trading as before. GDP is up. Employment is up. Growth until the last quarter was up. The drop in its worth is due purely because of supply and demand in the currency markets. 

And relative interest rates and inflation rates, and the expectation of movement thereon.....etc etc

All of the usual factors are at play; the drop in sterling caused by the referendum vote was caused by a fall in demand due to added uncertainty. The magnitude of the fall indicates the unexpected nature of the result, and the massive level of uncertainty it brought. It could have been mitigated by an increase in interest rates, but that would have had a negative effect on the fragile growth in the economy at the time. it has stayed low, because there is still fragility, and the uncertainty is most definately still there. 

£8bn is nothing in the currency trading scheme of things. Yes, some stand to gain substantially, but that amount of money has very little effect on currency values overall.

My view, FWIW is that those funding Boris and brexit stand to gain, but nor really just from a currency standpoint. Its more to do with overall policy rather than brexit per se. 

the talk of sterling rising on no deal is a bit fanciful, and its something that as an interested observer I am surprised I have never seen anything about, as the medium / long term effect on the economy overall - and especially the drivers of currency movements - are "largely negative", shall we say. There may be a small short term (profit taking ) rise but the economy is going to be weaker for a significant period, so the pressure on the pound will be down.

Post edited at 10:57
Report
tom_in_edinburgh 12 Sep 2019
In reply to john arran:

It's futures contracts that would be of more concern because the gains and losses as a result of correctly predicting the future movement of the pound are potentially far larger than straightforward shorts.

If we have politicians/advisers involved with hedge funds which have large positions based on Brexit happening on Oct 31 then we are really in deep shit because those guys are going to do whatever it takes to make sure they don't get wiped out.  Personal financial risk would also explain the level of craziness we are currently seeing.

The whole thing increasingly resembles a cesspool.

Report
Bob Kemp 12 Sep 2019
In reply to Postmanpat:

> It's not whataboutery. It's a valid question as to what Shani is actually so outraged about.

Shani doesn't appear to be outraged in this thread - his only post is a gentle dig at your debating approach. 

>   There are at least two things here: political donations-which most parties benefit from.

>   Investment positions benefiting from a specific outcome on the part of people who support, financially or otherwise, that outcome.

And? The problem is the way in which these may or may not be connected. The article claims there is a connection. 

>   I am trying to understand what Shani (or you) think is unique about the cases in the article (which,incidentally)  don't seem to be properly evidenced or even very big)

You got there in the end... "PostmanPat will be along shortly to ask what evidence you have "

Anyway, are you saying that this kind of behaviour -donations for influence and inside information - is acceptable because everybody does it?

Report
neilh 12 Sep 2019
In reply to Ian W:

The views that I see suggest £/$ to rise to 1.40 plus post a deal .

Mind you I do not speculate on these things.

And for all the talk of a weakening economy, it is surprisngly holding well based on all the latest figures.Wage growth being remarkable.

The far bigger issue is the global economy which is stagnating, if that goes into meltdown, then Brexit is an economical side show.USA and China is the key for us all.

Report
Bob Kemp 12 Sep 2019
In reply to Bjartur i Sumarhus:

That's a false equivalence. The argument here is about influence and inside information. Soros was not involved in either on Black Wednesday. He relied on public statements and information, in particular some comments by German officials about ERM realignment. 

Report
krikoman 12 Sep 2019
In reply to Lusk:

> What percentage of the population, in your opinion, has the slightest inkling of what any of that actually means?

> Just looks like a load fancy financial terms and lots of big numbers to me.  Meaningless. And why should I, or any other typical person be expected to understand it?


Because you're being f*cked over, to make a few people very rich, by the people who stand to make the most out of it.

That's why you should understand it, if you don't then ask someone who does, don't simply dismiss it as "too hard so f*ck it"

Post edited at 11:59
Report
timjones 12 Sep 2019
In reply to john arran:

We have a huge problem with trust in the media but can we trust the Byline Times any more than other sources?

Report
Ian W 12 Sep 2019
In reply to neilh:

> The views that I see suggest £/$ to rise to 1.40 plus post a deal .

I've not seen any; can you point me in the right direction, please, i'd like to see why that viewpoint is being formed. Post deal the £ / $ may rise, but thats also to do with the weak outlook in the US, and US traded stuff such as oil. I was actually responding to your assertion that sterling would rise on no deal; 

> And at the same time there there is alot of talk about the £ strengthening after the no deal. (from a previous post).

However the £ / € rate is less likely to rise.

> The views that I see suggest £/$ to rise to 1.40 plus post a deal .

> Mind you I do not speculate on these things.

Quite wise too!!

> And for all the talk of a weakening economy, it is surprisngly holding well based on all the latest figures.Wage growth being remarkable.

We are still full members of the EU, so not over the cliff yet. The wage growth is odd though, and doesnt seem to be short term. 

> The far bigger issue is the global economy which is stagnating, if that goes into meltdown, then Brexit is an economical side show.USA and China is the key for us all.

Which is why it is all the more important not to separate ourselves from our biggest and closet market. The damage potential from the loss of car manufacturers (and supply chain) and the banks cannot be overestimated. the EU nations are lining up to offer incentives to those wishing to relocate.......

Report
Ian W 12 Sep 2019
In reply to neilh:

> The views that I see suggest £/$ to rise to 1.40 plus post a deal .

> Mind you I do not speculate on these things.

> And for all the talk of a weakening economy, it is surprisngly holding well based on all the latest figures.Wage growth being remarkable.

> The far bigger issue is the global economy which is stagnating, if that goes into meltdown, then Brexit is an economical side show.USA and China is the key for us all.

Found it!

https://www.poundsterlinglive.com/gbp-live-today/12019-pound-to-euro-and-dollar-road-to-no-deal-goldman-sachs

Gratifyingly, we were both right - there is talk of a 1.40 usd rate, but nothing like that level of appreciation of the euro rate!

Report
neilh 12 Sep 2019
In reply to Ian W:

The £ has improved against the Euro despite all the justifiable concerns. 

Report
krikoman 12 Sep 2019
In reply to neilh:

> The £ has improved against the Euro despite all the justifiable concerns. 


Since when?

It's no where near what it was 3 years ago.

Report
Ian W 12 Sep 2019
In reply to neilh:

Not a lot! the recent gains have been broadly because the chances of no deal have been lessened.

Report
john arran 12 Sep 2019
In reply to john arran:

Just read on Twitter that 'Yellowhammer' is an anagram of 'Orwell mayhem'.

Seems appropriate!

;-)

Report
neilh 12 Sep 2019
In reply to Ian W:

Agreed.But its nowhere near as bad as people are saying. Like me you must chuckle at the headlines like £ sliding.

Are you a day trader?

Report
In reply to Bob Kemp:

That's why I winked..

Report
krikoman 12 Sep 2019
In reply to john arran:

> Just read on Twitter that 'Yellowhammer' is an anagram of 'Orwell mayhem'.

> Seems appropriate!

> ;-)


Or for poor Yorkshire limestone climbing

E' mamly howler

Report
Ian W 12 Sep 2019
In reply to neilh:

No, just an interested observer. I'm an accountant who has in the past had to deal with forex, and I currently import goods to sell and negotiate currency risks with a partner in the eurozone (he imports big bulk in dollars, and sells to me in either dollars. sterling or gbp, and i sell almost exclusively in gbp, so the 3 way relationship is important). I also chat to a relative of the current Mrs W, who is involved with the trading functions at "a large London based institution"). He helps me out understanding whats happening a bit, and i'm currently helping him learn to speak German.

Report
In reply to neilh:

especially after that news just now (ECB cuts rates and restarts QE of 20 billion a month)

"The European Central Bank cut interest rates further below zero and will start open-ended bond purchases after President Mario Draghi overcame critics of his stimulus policies to make a final run at reflating the euro-area economy."

Report
neilh 12 Sep 2019
In reply to Ian W:

I sell overseas so get paid mainly in $ ,some in Euros. No importing risk .

I have learnt to be wary of the views from dealers as you never really understand why they desperately want to buy the currency you have.So when I get attractive offers to buy $ I naturally want to figure out why.

Its a minefield.

Report
Ian W 12 Sep 2019
In reply to neilh:

minefield is a fairly vanilla word for it......

I learned most when i worked for a food wholesaler and we imported pork from denmark and holland and chicken from brazil. We had significant, predictable forex requirements, so used a dealer to help us fix better rates than the spots that had previously been used. We were fairly risk averse, as price stability was important to our customers (restaurants, ready meal prep firms etc...), I'd dealt with forward commodity contracts in a previous life, and thought i knew a bit about it. Oh my god. i knew nothing. The forex types were really good, and suggested i spend a couple of days in their office in london to learn a bit about what went on. Very instructive, and worth every minute i spent there. I was more than aware that they were making a margin on my money as well (sometimes small, sometimes large, i assume) , but using them really helped us get an advantage in our market, and the predictability of our cash outflows made me the bank managers best friend (the fd i took over from was "not very sophisticated" in his approach to cash management, which i suppose is why i took over from him.....). There are so many variables at play, it is absolutely impossible to say that "a and b caused sterling to fall". Just look at the post of not long ago pointing out that the eurozone have dropped interest rates; no real surprise, its been signposted, but there should be a reaction somewhere....

Report
john arran 12 Sep 2019
In reply to Ian W:

>Just look at the post of not long ago pointing out that the eurozone have dropped interest rates; no real surprise, its been signposted, but there should be a reaction somewhere....

Surely if it's been well signposted, then much of it will already have been factored in, which means the reaction sometimes comes before the event and no doubt makes explaining forex movements on the basis of actual events and circumstantial changes even more difficult/futile?

Report
Ian W 12 Sep 2019
In reply to john arran:

Yup. It could actually help explain the small rise in sterling of late, but not the fact it has also risen against the dollar.......it could well have been already baked in, as this QE and interest cut isnt exactly a surprise......

Because of the sophistication of the markets (and simply the mahoosive trading volumes), it takes a significant shift in policy to significantly alter the behaviour patterns or sentiment of the markets - something seismic like a surprise brexit referendum result is needed to have major effect. Hence this thread, I suppose.......

Report
beh 12 Sep 2019
In reply to john arran:

I support remain and find the FT to be pretty reliable for commentary.

https://ftalphaville.ft.com/2019/09/12/1568281802000/No-deal-Brexit-is-not-a-hedge-fund-conspiracy/

> The most-shorted companies have short theses which have nothing to do with Brexit, like Thomas Cook (over-leveraged) or Kier Group (over-leveraged).

> A fund might be short because of arbitrage opportunities, or to hedge a long position (which might contradict the notion it is betting on no deal).

> ...

> The fundamental issue is that the entire article is totally speculative. Which puts it firmly in the realm of conspiracy theories. Turns out, it’s not just the far-right who like to imagine that there’s a malevolent, rich financier controlling political outcomes.

Report
TobyA 12 Sep 2019
In reply to beh:

Thanks for sharing that. Guess who's feeling relatively smug about their earlier post now? ;-)

Incidentally, has anyone tried to find out about Byline News? This was my first time coming across them and I can't say I was particularly impressed.

Report
ClimberEd 12 Sep 2019
In reply to Route Adjuster:

> If you are shorting your own currency,  what currency do you do it with?  Messing with my head that one.

all currencies are 'exchanged' against the dollar.

When you have a pound/euro exchange rate it is actually a secondary rate based upon the pound and the euro against the dollar.

You would sell £s, almost certainly for $s, then when the £ has dropped 15% you would sell the $s and buy back £s.  - and have 15% more £s.

Hope that makes sense. 

It's actually a gamble on two countries, not just one. 

Report
Ian W 12 Sep 2019
In reply to TobyA:

Just seems like an online news site, trying to be a bit more like the broadsheets rather than funded by clickbait.

https://pressgazette.co.uk/byline-team-peter-jukes-launching-new-website-and-print-newspaper/

Any less biased than other news outlets - who knows?

Report
john arran 12 Sep 2019
In reply to TobyA:

> Thanks for sharing that. Guess who's feeling relatively smug about their earlier post now? ;-)

> Incidentally, has anyone tried to find out about Byline News? This was my first time coming across them and I can't say I was particularly impressed.

I did a quick Google before posting the OP and didn't turn up anything much, certainly nothing that made it sound notably dodgy.

The FT article is interesting, and I've become quite used to respecting the FT on Brexit matters in general, but I'm also reading some people questioning that too, on the basis of its major competitor Bloomberg having apparently concluded that dodgy currency shorting was more than just a theory. There's also some unnecessary points in the FT article that make me wonder what they're really trying to say, notably their pointing out other reasons why shorting happens and that the biggest funding of the referendum campaign was by a Remain supporter, both of which seem like distractions to me.

I'm not trying to claim that the Byline story is necessarily correct; it will always be difficult to demonstrate causality, but the FT rebuttal doesn't seem completely balanced either.

Report
ColdWill 12 Sep 2019
In reply to john arran:

The UK stock market is valued at 4 trillion I believe, this short position is equivalent to 0.1% of the market. This is pretty weak ground for a conspiracy theory.  These people are in for the long haul so they are not betting on a disaster.  I suggest you look at their complete portfolios to get a better idea of what they are expecting.

Report
john arran 12 Sep 2019
In reply to ColdWill:

My understanding is that the article was not claiming that those shorting the pound were trying to make no-deal happen, but that those responsible for deciding whether no-deal ends up happening (or at least their close associates) were shorting the pound, which could very much be a conflict of interests.

Report
Bob Kemp 12 Sep 2019
In reply to TobyA:

Don't be too smug Toby. The Byline Times article claims that Boris Johnson’s leadership campaign backers in the City are going to make billions of pounds if Britain exits the EU by the end of October.  It does not claim that there is a general hedge-fund conspiracy theory. The Byline Times' essential claim is not disproved by the points the FT authors raise although elements are certainly inaccurate. Essentially the FT article is setting up a straw man - well, two in fact, the first being that there is a general conspiracy, and the second that the article "[likes] to imagine that there’s a malevolent, rich financier controlling political outcomes". The financial information may be accurate but the FT authors are misusing it to prove their wider point. 

Report
elsewhere 12 Sep 2019
In reply to ColdWill:

> The UK stock market is valued at 4 trillion I believe, this short position is equivalent to 0.1% of the market. This is pretty weak ground for a conspiracy theory.  These people are in for the long haul so they are not betting on a disaster.  I suggest you look at their complete portfolios to get a better idea of what they are expecting.

Equivalent to 0.1% of 4 trillion is 4 billion. 

Just 0.1% of that 4 billion is enough (4 million) to finance a political campaign. For example, I think Leave.EU got 8-10 million from Arron Banks.

Report
MonkeyPuzzle 12 Sep 2019
In reply to Bob Kemp:

Bloomberg also did investigations into the big short on the referendum itself. Looking at the current behaviour of the government I'm not sure we should rule anything out at this point.

Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

> You got there in the end... "PostmanPat will be along shortly to ask what evidence you have "

>

  I thought "evidence based" policy was the in thing. How about evidence based argument?

  You see, when people quote superficial and probably misleading articles which they barely understand I just think it's reasonable to quiz the veracity of the articles and the points they make. Old fashioned, I know.

> Anyway, are you saying that this kind of behaviour -donations for influence and inside information - is acceptable because everybody does it?

>

  That's two different questions:

1) Donations to political parties are inherent in the system and legally sanctioned. I would love it if there were an alternative system but nobody has so far come up with one. Have you , because I am sure lots of people would love to know?

2) Are you saying that you know that these donations were made for, or resulted in, influence and inside information? I am sure lots of people would love to know .

Post edited at 17:22
Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

> Don't be too smug Toby. The Byline Times article claims that Boris Johnson’s leadership campaign backers in the City are going to make billions of pounds if Britain exits the EU by the end of October. 

>

  The article claims that brexit backers have about £4.5bn in sterling shorts. To make "billions", sterling would therefore have to fall nearly 50% and they would have to get their timing in closing the position perfectly.

  Do you really think that is likely?

Report
Postmanpat 12 Sep 2019
In reply to john arran:

> My understanding is that the article was not claiming that those shorting the pound were trying to make no-deal happen, but that those responsible for deciding whether no-deal ends up happening (or at least their close associates) were shorting the pound, which could very much be a conflict of interests.

>

  To whom are you referring?

  Incidentally, Marshall Wace, one of the hedge funds quoted, has £27bn under management. So even if it accounted for half of the £4.5bn it would still be less than 10% of their AUM . So it's just one of many different positions which for all we know could be offset by other long sterling positions.

Post edited at 17:35
Report
Ian W 12 Sep 2019
In reply to ColdWill:

> The UK stock market is valued at 4 trillion I believe, this short position is equivalent to 0.1% of the market. This is pretty weak ground for a conspiracy theory.  These people are in for the long haul so they are not betting on a disaster.  I suggest you look at their complete portfolios to get a better idea of what they are expecting.


Nothing to do with stocks / shares here. This is to do with currency trading.

Report
Ian W 12 Sep 2019
In reply to john arran:

I mentioned in a post upthread about the scale of currenct trading - as an example, the average daily volume of gbp / usd contracts traded is approx $300 billion. Thats only contracts involving those two currencies. $300,000,000,000 per day.

The average daily value of EUR / USD trades is $575 billion

So thats not far off $1 trillion per day.

I suppose the point is that those holding £8bn of shorts stand to make money on a certain outcome, and could influence players who can make it happen, but wow, what a risky strategy. And their £8bn is but a tiny drop in the vast ocean of currency trades

Report
Postmanpat 12 Sep 2019
In reply to john arran:

> My understanding is that the article was not claiming that those shorting the pound were trying to make no-deal happen, but that those responsible for deciding whether no-deal ends up happening (or at least their close associates) were shorting the pound, which could very much be a conflict of interests.

>

Incidentally, 2: the more I read this article the more ridiculous it reads.

1)The short positions are not on the pound as you inferred (as far as I can tell), they are on individual stocks. Investors do not have to declare short positions in currencies or bonds.

2) There is nothing demonstrate the stock shorts are "brexit related" (although some of them maybe). Some of the most shorted stocks on the list are Debenhams, Metro Bank and Thomas Cook. I don't know about you but I can think of a ton of reasons to short these which aren't brexit.

3) There is no reliable analysis of , for example, Odey's overall net short of UK stocks across his company's funds. It's probably true that in some aggressive funds his biggest shorts position in the UK and that he is net short. But, for example, in his European fund his biggest long position has been in the UK for several years. Both probably reflect that the company's background and core expertise is in the UK as much as his avowed beleif that brexit should happen.

  In short, the article is just a series of vague and misrepresented information which demonstrates nothing, and certainly nothing beyond what the hedge fund managers themselves have publicly declared.

Report
Postmanpat 12 Sep 2019
In reply to Ian W:

> Nothing to do with stocks / shares here. This is to do with currency trading.


Really?

Report
Ian W 12 Sep 2019
In reply to Postmanpat:

As far as i understand the thread.......if you short stocks you are betting on company share price movement, which has many influences outside of currency exchange rates. This has all been about the currency movement and its influences.

Edit - john arran started it; john, were you referring to stocks or exchange rates?

Post edited at 18:12
Report
Bob Kemp 12 Sep 2019
In reply to Postmanpat:

>   I thought "evidence based" policy was the in thing. How about evidence based argument?

I'm all for it. 

>   You see, when people quote superficial and probably misleading articles which they barely understand I just think it's reasonable to quiz the veracity of the articles and the points they make. Old fashioned, I know.

PatronisingManPat is back...

>   That's two different questions:

> 1) Donations to political parties are inherent in the system and legally sanctioned. I would love it if there were an alternative system but nobody has so far come up with one. Have you , because I am sure lots of people would love to know?

Loaded questions are an informal logical fallacy. 

> 2) Are you saying that you know that these donations were made for, or resulted in, influence and inside information? I am sure lots of people would love to know .

As above...

Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

> I'm all for it. 

> PatronisingManPat is back...

> Loaded questions are an informal logical fallacy. 

> As above...


  If you think that asking for evidence is a weak form of debating then expect to be patronised good and hard.

  If you use loaded questions such as "Anyway, are you saying that this kind of behaviour -donations for influence and inside information - is acceptable because everybody does it?" then expect to get loaded questions back. It only seems fair.

  Anyway, nn a nutshell, the loading in your question has no reasonable basis to support it.

Post edited at 19:00
Report
Postmanpat 12 Sep 2019
In reply to Ian W:

> As far as i understand the thread.......if you short stocks you are betting on company share price movement, which has many influences outside of currency exchange rates. This has all been about the currency movement and its influences.

> Edit - john arran started it; john, were you referring to stocks or exchange rates?


John appeared to be referring to currency positions. The article is unclear but is probably, given the website it links to and the unavailability of currency positions, referring to equities.

Report
Bob Kemp 12 Sep 2019
In reply to Postmanpat:

No, I don't think that asking for evidence is a weak form of evidence. I haven't said that at any point. You should know very well that I do exactly the same thing. You appear to have lost your sense of humour. Shani's original comment was a joke. I went along with it. My question was a straightforward one, which you haven't answered in a straightfoward way.  

Report
Postmanpat 12 Sep 2019
In reply to Bob Kemp:

  The answer is “no”. But your question was loaded, as you know. I don’t accept its premise.

Report
Ian W 12 Sep 2019
In reply to Postmanpat:

He certainly did (subject to his confirmation). The article in that Byline times refers to currency, but the link in it is certainly equities. THe article freeflyer linked to is currency, as is the rest of the thread.

I have no idea what you mean by "unavailability of currency positions". Have a read of this, but articles like this come with an insomnia warning, and its potentially useful to set an alarm for, say, 30 mins time....

https://www.thebalance.com/what-it-means-to-go-short-in-investment-terms-1344960

Report
john arran 12 Sep 2019
In reply to Ian W:

> Edit - john arran started it; john, were you referring to stocks or exchange rates?

I was taking it to refer to currency shorting rather than stocks, although I agree that one link in the article appears to link to a stock page. Unfortunately it appears to be a live stock page so nobody can be sure what it was showing when the article was researched or when it was written.

Report
Postmanpat 12 Sep 2019
In reply to Ian W:

> He certainly did (subject to his confirmation). The article in that Byline times refers to currency, but the link in it is certainly equities. THe article freeflyer linked to is currency, as is the rest of the thread.

> I have no idea what you mean by "unavailability of currency positions".

>

 As per my post of 1803. Asset managers are not required to disclose short positions in currencies or bonds, hence such information is generally unavailable.

Report
Ian W 12 Sep 2019
In reply to Postmanpat:

A-ha. I thought you meant positions in general, rather than information on those positions actually held. Makes sense now, with extra words added......

Report
TobyA 13 Sep 2019
In reply to Bob Kemp:

>   It does not claim that there is a general hedge-fund conspiracy theory.

No, that's fair enough - but my reading of the article left me with the very strong impression that they are hinting at a conspiracy by people with lots of money betting on this to push for a no deal Brexit through funding so-inclined politicians.

I'm just sure its far more complicated than that (as the FT blog suggests).

I did try reading up on who and what Byline News is and read similar articles to the one Ian I think it was linked above. They don't seem to be the provisional wing of Momentum or something, but any site that says they're going to tell you truths that everyone else refuses to, always seem a bit iffy. But not the Canary using random tweets to somehow supposedly show something while stoking outrage.

Report
Bob Kemp 13 Sep 2019
In reply to TobyA:

I think they're a serious effort at providing a left of centre alternative that tries to do proper news. I suspect that they're trying to do it on minimal resources and that means there are weaknesses when they take on a big investigative task like this. There's a Full Fact report on this article which raises some problems with it, but it also gives some insight into Byline Times' approach - it looks like they are taking things seriously.  Not like the Canary and the like as you say. 

https://fullfact.org/economy/short-positions/

Report
ColdWill 13 Sep 2019
In reply to john arran:

Brexiteer donor Paul Marshall’s firm has £1.3 billion in short positions on the UK stock market. His firm manages some £30 billion of assets. Which suggests he is in reality geared to profit far more from rising than falling stock markets.

Report
ColdWill 13 Sep 2019
In reply to elsewhere:

but the 'money' isn't available for a campaign is it?

Report
elsewhere 13 Sep 2019
In reply to ColdWill:

> but the 'money' isn't available for a campaign is it?

Billions is certainly available for offices, dividends, salaries and bonuses so there is certainly millions available for personal political campaign contribution that might boost their future earnings. 

Post edited at 19:13
Report

Please Register as a New User in order to reply to this topic.