Morning Brief – Thursday 11th

Doomsday:

An unnecessarily intelligent man named Francis Fukuyama, in 1989, wrote an essay entitled “The End of History?”. In this essay, written in the twilight of the cold war, the American Political Scientist posited the hypothesis that perhaps, with democracy sweeping across the globe, history would be over. Striking a strong resemblance to the somewhat questionable theoretical argument of the democratic peace thesis – the empirically dubious series of propositions that concludes no two democratic states have ever gone to war against each other – Fukuyama questioned why his-story would continue; what would we have to talk about?! Well Fukuyama, at least thus far, is wrong. Historians to this day still debate the formulation and failures of the League of Nations: its exclusions; its objectors; its failures. They argue perhaps its failures at least allowed a space for Nazi Germany to grow and the second world war to eventually materialise. What Fukuyama failed to realise is that institutions are history, history is not war and the democratic and liberal paradigm that we now live in is just a worthy of his story than any war has ever been. The potential consequences of Britain exit upon the European Union could be far reaching and it’s not patriotically egotistical to suggest that, much as the United States’ non-membership of the League of Nations hindered institutional success altering the course of history, Britain’s non-membership of the Union could too change the lives of billions alive now and to be born. Back to forex: I implore you; don’t be on the wrong side of history. Something phenomenal, for better or for worse, is about to happen with consequences and opportunities for hidden value that occur perhaps once in a lifetime. The rumours that have moved markets dramatically this week, pinning the Pound as high as 1.1450 against the Euro and 1.3247 versus the Dollar have all suggested an informal deal may be on the table as early as next Monday. Confirmed by Barnier to the European Commission yesterday, this is entirely possible and for now we wait to see what it looks like.

Since Market Open:

• GBP:   On a precipice: investors get cold feet as the Brexit arrangement draws ever close.

• EUR:   Bavarian regional elections this Sunday push European political risk back towards Germany with Merkel’s premiership position at risk.

• USD:   Oil continues to drive markets crazy with knock on effects to both the Pound and the Dollar apparent throughout markets. Trump’s continued attacks on the Fed weigh on the Dollar.

• EM:    Emerging markets enjoy Dollar and equity market weakness as their returns appear competitive once again and debt refinancing evolves to be a little less burdensome.

Discussion and Analysis by Charles Porter

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