The Brexit Thread

[Guy Profumo]

Of course, "Reasonable Worst Case" is an oxymoron

I believe the nuclear industry prefer "maximum credible accident"

[johnr]

Word of warning, that article's methodology is pretty suspect. The data does not bear out the writer's thesis..

Indeed, it is the case that the article has been very widely shared, but a number of folk are questioning the conclusions - Byline Times doesn't have the best record for veracity. I'm hoping that, if the methodology does turn out to be suspect, all those Remainers fervently tweeting it will then apologise for sharing fake news.

[Janik]

The damage will already be done by then.

I think, overall, the right and other reactionary movements are more prone to believing and disseminating logically or factually flawed evidence that supports a dogma they already hold. But the left (or remain in this case, which is not the same thing) is definitely also susceptible to it, and to the ignoring of evidence that contradicts a cherished opinion about how the world should be rather than how it really is. See nature/nurture debates as a prime example of that.

[Ginger Yellow]

if the methodology does turn out to be suspect,

It is. The article doesn't do any work to support its proposition. Even leaving aside any doubts about how "connected" the hedge funds are to Johnson, which I can't evaluate because they don't really say which ones they're talking about, the data they use doesn't say anything like what they say it does, even if that part turns out to be completely fair. Reposting my comment at another place:

These aren’t “short positions on a no deal Brexit” or “short positions on the EU referendum result”. They’re just short positions on (the equity of) companies. All companies listed in the UK, whether they’re affected by Brexit or not. That’s what hedge funds do. They go long some things and short other things.

There’s no attempt in the analysis to see what these funds are actually shorting, whether they’d be disproportionately affected by Brexit (which would potentially indicate hypocrisy, I suppose), or whether they’re just companies that everyone knows are struggling. Do the connected funds short more or differently than the unconnected funds? The article doesn’t care. It doesn’t even tell you what proportion of the total outstanding shorts (GBP 13.4bn, using their data source) the connected funds make up, and how that compares to the connected funds’ AUM as a proportion of all funds, which is about the bare minimum analysis one would want to do for a story like this.

More fundamentally, the thesis doesn’t seem to make much sense. For there to be something nefarious here, you’d want a fact pattern something like this: funds short Brexit-exposed companies, then fund Boris’s campaign in hopes of profit as hard Brexit becomes more likely. But their own chart shows the vast majority of the shorts being put on over a month after Johnson launched his campaign, ie after you’d expect most fundraising to have happened and when it was already absolutely clear he was going to win pursuing a hard Brexit policy (and, importantly, after a whole raft of negative economic data had been published). It’s just not consistent with any logical scheme.

And looking at the actual most shorted companies and who’s shorting them, it seems pretty standard.

Odey, for instance, has big short positions in among other firms Debenhams (a deeply troubled department store which just went through a creditors voluntary arrangement and closed a bunch of stores) and Metro Bank (a so-called challenger bank which relatively recently disclosed it had messed up its capital requirement calculations and had to raise new capital), and Intu Properties, which owns a bunch of crappy shopping centres that are really struggling because of the likes of Debenhams. On the face of it, none of Odey’s biggest shorts are obvious Brexit bets.

Odey’s biggest positions (as a proportion of outstanding stock)

Debenhams 7.87 7.87

Lancashire 5.21 5.19

Metro Bank 3.10 3.27

Intu Properties 3.09 2.97

IQE 1.31 1.90

Lookers 1.32 1.32

Jupiter Fund Management 1.22 1.19

AA 0.99 0.99

Royal Mail 0.91 0.91

Ashmore Group 0.89

Indeed, the only one of the top 10 most shorted overall companies that seems to be disproportionately impacted by Brexit is Thomas Cook, a high street travel agent. But, again, that’s been in trouble for a long time and is going through a debt restructuring.

[Ginger Yellow]

It's actually worse than I wrote in that comment, as the article explicitly states that the relevant period is before the shorts started to take off. So what's the argument?

[ursus arctos]

Thank you for doing that GY

You saved me a good deal of time and effort.

[Ginger Yellow]

Not how I had envisaged spending my staycation, but whaddaya gonna do?

[ursus arctos]

Beats watching baseball or American football, I'm afraid.

This particular genre of financial illiteracy is guaranteed to be used by those maintaining the status quo as evidence that opponents have no idea what they are talking about.

[Ginger Yellow]

Tell me about it. I was expecting the Cubs' season to peter out, but I wasn't expecting to get swept by the fucking Padres.

[ursus arctos]

It's an interesting commemoration of the 50th anniversary of the collapse that scarred me for life.

[Ginger Yellow]

The very Remain Alphaville rags on that article too.

[San Bernardhinault]

The last two days have been some of the very few recent ones where watching baseball hasn't been miserable.

[San Bernardhinault]

Oh, and thanks for doing to legwork on showing that the hedgie-article is, basically, bollocks.

[ursus arctos]

[URL="https://twitter.com/htscotpol/status/1172149511998922753?s=21"]https://twitter.com/htscotpol/status/1172149511998922753[/URL]

[Diable Rouge]

Fifteen minutes until whatever Jolyon Maugham's anti-climatic breaking news is.

[Diable Rouge]

https://twitter.com/bbclornag/status/1172162975978971137

[Nefertiti2]

Great to see the BBC dealing with the crisis as a state broadcaster should.

[URL]https://twitter.com/fiskjeremy/status/1171902357820661760?s=21[/URL]

[URL]https://twitter.com/ianclucas/status/1172114602718617600?s=21[/URL]

[Nocturnal Submission]

Fifteen minutes until whatever Jolyon Maugham's anti-climatic breaking news is.

If it's Kim Clijsters coming out of retirement, the BBC have scooped him.

[Walt Flanagans Dog]

The full judgment from the Scottish courts is available on Twitter, judgment fans.

[Walt Flanagans Dog]

https://twitter.com/JolyonMaugham/status/1172171677867769856?s=09

[Diable Rouge]

Plaid Cymru promising a major announcement tomorrow, which suggests either a defection or an electoral pact:

https://twitter.com/Plaid_Cymru/status/1172217956316733443

[Sporting]

"The Speaker turns to the question of a codified constitution, saying the UK’s in a group of only three nations not to have one. He says the UK has been “travelling in the direction” of such a constitution."

Which are the other two nations?

[ursus arctos]

My guess is that he is thinking of New Zealand and Canada, though other candidates do exist.

[Amor de Cosmos]

Canada's Charter of Rights and Freedoms is as close as spitting to a constitution isn't it? Certainly more codified that anything the UK has.

[DCI Harry Batt]

Those judges seem pretty convinced Johnson was lying like a cheap rug, innit.