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Brexit - Financial Market & Institutions
In June 2016 majority of British citizens voted to withdrawal from the European Union (EU). Since then there has been immense debate over the impact of the withdrawal on the UK, other EU countries, and the EU as a whole. One of the areas where the withdrawal may have a devastating impact is the trading market. Focusing on the market perspective, this essay discusses the impact of Brexit on the trading market. The essay also considers the implications of the exit on the pound.
UK's trading market occupies a crucial position in the economy of the UK, the EU, and the world at large, meaning that Brexit could have catastrophic impacts on the market. Contrary to what many expected, the stock market was insignificantly affected following the referendum. Nonetheless, this does not necessarily mean that the outcome would be similar if Brexit actually happens.…
Blitz, R. (2017, March 13). What will happen to the pound when Article 50 is triggered? Financial Times. Retrieved from https://www.ft.com/content/69abb394-05be-11e7- aa5b-6bb07f5c8e12
Brinded, L. (2017). Brexit is killing the pound but its having a really productive side-effect on Britain's economy. Retrieved from http://uk.businessinsider.com/adam-smith - institute-brexits-impact-on-the-pound-uk-economy-jobs-2017-4?IR=T
Stevenson, E. (2017). The road to Brexit: what next for shares, sterling and property? Retrieved from http://www.cityam.com/260523/road-brexit-next-shares-sterling-and - property
dated after May 2016, you have read that provides a real world example of a class topic: foreign exchange market (spot transaction, forward transactions, forward change swap transaction), cross rate, arbitrage, triangular arbitrage, forward contracts, parity conditions, law of one price, purchasing power parity, real exchange rates, fisher effect, international fisher effect, interest rate parity, covered interest arbitrage, uncovered interest arbitrage. Choose any article which includes any of those topics, also it should be dated after May 2016 and it should be Wall Street Journal article. Include the title of the article and the date it appeared in your summary.
The article chosen is from the Wall Street journal and it is about Brexit and the perceived or actual effects in the market in light of that vote. Indeed, currency valuations and other things in the international markets swung greatly from the Brexit vote alone and this is curious given…
Nelson, F. (2016). Brexit: A Very British Revolution. WSJ. Retrieved 27 October 2016, from http://www.wsj.com/articles/brexit-a-very-british-revolution-1466800383
Brexit on United Kingdom (UK) economy
The June 23 Brexit vote has undoubtedly shaken the European policy, and impacted the UK economy in ways that are both known and yet to be unraveled. Amid the impacts of the Brexit vote, one sure thing is that the vote has led to significant uncertainty on the future of the European integration process (Fichtner et al., 301). Specific to the UK economy, the Brexit vote is expected to have both short-term and long-term effects. Soon after the vote, there was an increased uncertainty on the prospects of the UK. This considerable increase in uncertainty has been reflected in the rather unstable pound. This essay is based on the argument that, Brexit will harm the UK economy in the short-term but be beneficial in the long-term. Therefore, the essay focuses on the negative effects of Brexit to the UK economy in the short-term and…
Bachmann, R., Elstner, S. & Sims, E.R. "Uncertainty and Economic Activity: Evidence from Business Survey Data." American Economic Journal: Macroeconomics 5(2), (2016), 217 -- 249. Web.
Buiter, W. et al. The implications of Brexit for the rest of the EU, Vox. (2016). Web.
Fichtner, Ferdinand, et al. "Brexit Decision Is Likely To Reduce Growth In The Short-Term." DIW Economic Bulletin 26/27 (2016): 301-307. Web.
Woodford, THE ECONOMIC IMPACT OF 'BREXIT': A report by Capital Economics for Woodford Investment Management, (2016). Web.
Few people expected Brexit to happen: analysts and investors indicated that the referendum would fail. Even Farage exhibited little optimism. The general public seemed to give off a different air, saying little in terms of which they intended to vote or at least not letting on in the polls that they were moving decidedly towards Brexit. In private, much of the public was supportive of leaving the EU but because of public tensions, including the murder of a PM by a crazed anti-EU Brit, much of the general public was tight-lipped—and so the results of the election surprised everyone.
The financial markets acted panicky initially. Gold spiked; the pound dropped against the Euro (Bird, 2017). However, markets soon reassessed the situation and once the initial panic subsided, gold reversed and both European and U.S. markets improved; only Sterling remained weaker, post-Brexit (Nixon, 2017). In the UK, mining companies…
Bird, M. (2017). Can Sterling hit parity with the Euro? WSJ. Retrieved from
Cox, J. (2016). A week after Brexit panic, investors are buying everything. CNBC.
Retrieved from https://www.cnbc.com/2016/07/01/a-week-after-brexit-panic-investors-are-buying-everything.html
Nixon, S. (2017). Markets risk shock if no Brexit deal is struck. WSJ. Retrieved from
On June 23, 2016, a referendum was held in the United Kingdom, where voters were asked to decide between remaining in the European Union or leaving it. The vote was close – 51.9% voted to leave and 48.1% voted to stay, and the turnout was 71.8% (Hunt & Wheeler, 2018). The terms of the vote were that the UK was to leave the EU by March 29, 2019, and at present the EU is in a transition period leading up to what is known as "Brexit."
There are a few issues worth unpacking with respect to why the UK is leaving the EU. The short answer is that a referendum was held, and the vote was to leave, so the politicians in charge believe that they are obligated to leave. The long answer is quite a bit more complex.
The UK was not part of the…
The Potential Effects of Brexit on the European Union
Why Did the UK Voters Approve Brexit?
Developing Post-Brexit Trade with the European Union
The Economic and Political Impact of Brexit
The International Implications of Brexit
Should the UK Reconsider Its Brexit Decision?
The Pros and Cons of the Brexit Decision
A. Background and overview
B. Immediate after effect of Brexit vote
C. What the future holds
In June 2016, voters in the United Kingdom approved the so-called “Brexit” referendum, signaling the withdrawal of the British Commonwealth from the European Union. Although a number of economic indicators experienced a short-term downturn after the Brexit vote, most indicators have returned to their pre-Brexit levels and some have even improved. There are also other signs that the devastating consequences of the Brexit initiative will not materialize and there is a…
One of the greatest blows to the European Union has been the vote of one of the Union’s key members, Great Britain, to exit the EU in a measure known as Brexit. The resolution was passed by only a slim majority of the British public. Concerns about the stability of the Union as the United Kingdom begins to make its slow break from the fold were heighted recently, according to John Cassidy’s 2018 article in the New Yorker: “Boris Johnson’s Resignation Can’t Disguise the Harsh Reality of Brexit.” Two critical negotiators for Britain, David Davis, the Secretary of State for Exiting the European Union and Foreign Secretary Boris Johnson, resigned from Prime Minister Theresa May’s cabinet, accusing her of allowing for too many concessions. There are concerns within Britain’s Conservative Party of embarking upon a so-called “soft” Brexit that does not sufficiently extricate Britain from its responsibilities to the European…
The people of the UK voted to leave the EU in 2016. Article 50 was submitted in March 2017, and discussions since then have focused mainly on how England would trade with the EU once it was formally no longer a member of the EU. Much of the hand-wringing done since then has been over how Britain would manage the separation: would there be a “soft deal,” a “hard deal,” no deal, a delayed deal? The questions continue to be asked, so it is important to understand what is at stake in each case. This paper will examine the ramifications of the various possible outcomes of what has come to be known as Brexit.
Understanding what is at stake first requires an understanding of where the UK currently sits with regard to trade arrangements. Currently, the UK’s trade relationship with the EU is not supportive of protectionist trade…
On December 11th, parliament will make a decision on whether or not to accept Britain’s withdrawal agreement with the European Union. What are the ramifications for businesses, most specifically financial firms? From a PESTEL analysis perspective, it is important to note that financial firms ought to not only assess, but also analyze the relevant macro-environmental factors likely to impact the way they do business. Four factors will be taken into consideration in this discussion, with the context being the article; Financial Firms have Quietly Prepared for Brexit. There said factors are political, social, economic, and legal factors.
This has got to do with the degree (and impact) of government intervention in the economy. In reference to Brexit, the Dec 11 parliamentary decision will impact financial firms and how they conduct business. Although an event of this nature ought to trigger uncertainty in the industry, the article argues…
Brexit: The Causes of the British Vote to Leave the European Union
Brexit was the referendum vote that saw the United Kingdom pull out of the European Union. The European Union (EU) is a 29-member state egional Trade Agreement bringing together various European nations. The formation of the union saw the elimination of most barriers to the movement of labor, capital and goods between the member states. It harmonized the laws, rules and standards regarding trade amongst member nations. Most of the member states use the Euro as their currency except for Britain (ies, 2016).
The Brexit referendum had been organized on 23rd June 2016, and the issue in question was whether or not the UK ought to leave the EU. 17.41 of the voters voted for Leave while 16.41 voted for emain. There was a political design to the referendum where the then Prime Minister, David Cameron, hoped that…
Aspaker, A., Denver, D., Garnett, M., Runcimann, D., Barber, S., Lord., C., Wright, N., Todd, J., O'Hara, G., Hertner, I., & Harvey, M. (2016). The Brexit drama and the dawn of a new era. Journal of the British Politics Society, Norway, 11(3), 1-24. Retrieved from http://www.britishpoliticssociety.no/British%20Politics%20Review%2003_2016.pdf
Chu, B. (2016, June 26). Why did people really vote for Brexit? If we don't face the psychological reasons, we'll never bring Britain together. Retrieved June 20, 2017, from Independent: http://www.independent.co.uk/voices/brexit-eu-referendum-why-did-people-vote-leave-immigration-nhs-a7104071.html
Cutts, D. (2016, June 29). Brexit! The Result and Its Implications. Retrieved June 20, 2017, from E-International Relations: http://www.e-ir.info/2016/06/29/brexit-the-result-and-its-implications/
Offe, C. (2016, December 9). Brexit and the Weaknesses of Referenda. Retrieved June 20, 2017, from Global Policy Journal: http://www.globalpolicyjournal.com/blog/09/12/2016/brexit-and-weaknesses-referenda
Brexit and British Trade: Advantages and Difficulties
In June 2016, the UK voted to leave the European Union (EU). Commonly called "Brexit," the decision has raised a number of questions regarding Britain's current trading arrangements as well as possibilities and obstacles that await the UK post-EU (Hatzigeorgiou, Lodefalk, 2016). From a trade theory and policy perspective, this paper will assess the UK's current trading arrangements along with the potential advantages and difficulties it will likely face as a result of being outside the EU.
From a mercantilist trade theory perspective, Britain's current trading arrangements are based on what is good for the EU member states (Britain formerly being one of them). It is less protectionist from a nationalist point of view and the idea that a country might import less than it exports and thereby have a trade surplus. In the EU, the UK had a 24 billion pound trade…
For AAPL, on June 20th, 2016, I sold 50 Jun17 90.00 -- to open for a total of $59,750. On, July 6, 2016, I bought them back to close at 11.55 for a total of $57,750 -- for a total gain of $2,000 minus $65 for commissions/fees.
For MSFT, on the same dates, I bought 200 Jun17 50 calls at 4.70 to open for a total of $94,000 and sold to close 200 Jun17 50 calls at 5.15 for a total of $103,000.00. Total gains on this trade were $9,000 minus $228 in commissions/fees.
For CHK, on the same dates, I sold 300 Jan17 4.50 calls at 1.15 for a total of $34,500 and bought to close 300 Jan17 calls at 1.03 for a total of $30,900. Total gains on this trade were $3,400 minus $335 in commissions/fees.
For XOM, on the same dates, I bought 200 Jun17 92.50…
Popper, Nathaniel. "The first big company to say it's serving the legal marijuana trade?
Microsoft. Wall Street Journal, 16 June 2016. Web. 21 June 2016.
Yan, Sophia; Petroff, Alanna. "European stocks sink and pound tumbles over Brexit fallout." CNN Money. 6 July 2016. Web. 6 July 2016.
Figure 1. AAPL trade.
Currency Exchange ates
The author of this brief report has been asked to look at the subject of currency exchange rates and what they mean in terms of fiscal policy and the overall economic health of a country. The questions that will be answered will include whether the currency exchange rates for a country are an economic barometer of a country, the identification of an exchange rate and the comparison of its rate to the United States dollar and the primary factors that lead to the rate of exchange when it comes to comparing one country to another. While the currency exchange rate is indeed a good overall metric to look at when it comes to economic health, there are other figures and milestones that should get just as much, if not more, weight when it comes to ascertaining the economic health of a country.
As for whether currency…
Bergen, J. (2004). 6 Factors That Influence Exchange Rates. Investopedia. Retrieved 7 September 2016, from http://www.investopedia.com/articles/basics/04/050704.asp
Wheeler, B. & Hunt, A. (2016). Brexit: All you need to know about the UK leaving the EU - BBC News. BBC News. Retrieved 7 September 2016, from http://www.bbc.com/news/uk-politics-32810887
My political ideology is based on my reading of the early Federalist and Anti-Federalist Papers. When I read these papers I realized that the way our country works today was really shaped by events back then during the days of the founding of the country's constitution. I used to be a Constitutionalist and identify with the libertarians led by on Paul, who pushes to uphold the Constitution. But after reading the Anti-Federalist Papers, I realized that the Constitution itself was never really a good thing: it was essentially designed to take power away from the states and place it in the hands of a central government, an idea promoted by Alexander Hamilton in the Federalist Papers (Federalist No. 6, n.d.). The Anti-Federalists viewed this as a violation of the freedom and autonomy they had just won from England in the evolutionary War (Brutus No. 1, 1787). If the…
Brutus No. 1. (1787). Retrieved from http://www.constitution.org/afp/brutus01.htm
Federalist No. 6 (n.d.). Retrieved from http://avalon.law.yale.edu/18th_century/fed06.asp
Jamieson, A. (2016). Brexit Poll: Majority of Brits want to leave EU as referendum looms. NBCNews. Retrieved from http://www.nbcnews.com/storyline/brexit-referendum/brexit-poll-majority-brits-want-leave-eu-referendum-looms-n593441
Germany has established itself as a successful country with a growing and stable economy. In terms of its economic policies, since 2014 its score has fallen by .2 placing it into rank 5 within the international top ranks. Of its many efforts to stabilize the country, the most notable is increased regulation, meaning pension-system expansions and a minimum wage (). Along with economic policies favoring regulation, Germany has remained strong in terms of employment growth and export performance, allowing for low unemployment rates and rising wages. While Germany has improved and stabilized, the rising influx of refugees has put a damper on the country's ability to create new policies for the labor-market.
Regardless, there are many positives in Germany's economic policies that has boosted tax revenue. The boost also comes in terms of reduction of debt-to-GDP ratio even with rising debt. Germany has done an amazing job of successfully addressing…
South Coast Railway is evaluating a proposal for a five-year franchise from the UK government. This proposal would be to operate a high speed commuter rail service from 2018 to 2022. The following report will examine the financials relating to this decision, and the decision-making heuristic.
The decision at hand is essentially a capital budgeting decision. There are a few different ways to evaluate a capital budgeting decision. The most common is the net present value (NPV) technique. This relies on discounted future cash flows to make the decision. The principle behind the use of discounted cash flows is that money earned today can be reinvested, and because of that, a pound earned in the future is inherently worth less than a pound earned today. The value of future money decreases over time. The NPV method discounts those future cash flows back to present value, and compares then…
Equities and Energy Options
The trades executed are for long MSFT, short AAPL in tech; long XOM and short CHK in energy. These trades are based on both sector sentiment and fundamentals. MSFT appears to be in an outperform trend while AAPL is poised to underperformed following poor sales data in China, slowing down of growth.
In energy, the price of oil is a big factor in any stock's performance and with crude hitting a ceiling at $50, it will not be good for companies like CHK which are overwhelmed by debt and need oil prices to be higher in order to maintain any kind of leverage. XOM on the other hand is in an outperform trend which looks to continue as it nears a deal with Russia to deliver gas to China and as the company continues to invest along these lines, giving it an outlet should oil prices…
Ausick, Paul. "Exxon Adds $45 Billion to Market Cap." 24/7 Wall St., 20 June 2016.
Web. 21 June 2016.
Cherney, Mike. "Apple to issue $10 billion to $12 billion of bonds to finance share buybacks, dividends." Wall Street Journal, 16 Feb 2016. Web. 21 June 2016.
Gomez, Amanda. "Here's Why Chesapeake Energy (CHK) Stock is Falling Today."
Political unrest is a worldwide occurrence that manifests itself for brief or long periods in many nations. One nation Greece, witnessed political unrest due to globalization efforts. The 2016 article, "Glocal' disorder: Causes, conduct and consequences of the 2008 Greek unrest" by authors Sappho Xenakis and Leonidas K. Cheliotis examines the Athens-based political unrest and its spread to other Greek cities in late 2008. The authors sought to understand why events occurred as they did in Athens to see how local, national, as well as international arenas play a role in shaping localized incidents of chaos.
The article begins with criminological examination of social unrest and riots that have long been subject to comparative and single case studies where transitional/global dimensions of such events have barely featured. ecently however, criminology has considered global and transitional conditions as being important arenas for exploration. iots in countries are signs of political unrest…
Xenakis, S., & Cheliotis, L. K. (2016). 'Glocal disorder: Causes, conduct and consequences of the 2008 Greek unrest. European Journal of Criminology, 13(5), 639-656. doi:10.1177/1477370816636933
Euro before Brexit has maintained a higher value than the dollar since its creation. However, post-Brexit it depreciated slightly from 0.9109 and now stands at 0.88260 compared to the U.S. Dollar value of 1, meaning it appreciate in value within the time span of one month. The Australian Dollar has maintained a lower value than the U.S. Dollar. However, in the month of August it hit a dip of 1.29, appreciating in value. The same thing happened to the Canadian Dollar, which has always had lower value than the U.S. dollar but saw an increase in value going down to 1.28637 from 1.3212. The Japanese Yen took the same route appreciating in value from 106.55 to 100.18. The same as well for the Chine Yuan which started in July with 6.68 and now stands at 6.64879.
In regards to 4 years ago, the euro maintained a similar value at 0.82.…
After the end of WWII, the British were faced with a severe labor shortage. There were simply not enough workers to tend to the work needed in England. The war had wrought considerable destruction and the solution, it seemed at the time, was to import labor. Immigrants from the Caribbean countries, such as Jamaica, Trinidad and Tobago and Barbados were invited to the UK between the years of 1948 and 1971 to help fill the labor shortage. They arrived at the ship the MV Empire Windrush, which is where the name “Windrush Generation” comes from.[footnoteRef:2] As a result of the 1971 Immigration Act, people living in the UK were given the right to stay. However, in recent years, immigration laws have become more restrictive, and it is now estimated that nearly 50,000 long-term residents in the UK are at risk of being deported—many of them elderly. This…
Cloud Computing Governance
There are many issues and implications that must be taken seriously when it comes to cloud computing. While the possibilities and capabilities that are newly or more significantly realized by cloud computing are fascinating and voluminous, so too are the security risks and ethical quandaries that can and do come up when it comes to the subject. With that in mind, this report shall cover two main topics that are related to cloud computing. The first is how cloud computing is and should be influenced by corporate governance and the broad impact of cloud computing on mobile computing will be assessed as well. While there are immeasurable benefits and perks to moving to a cloud-based solution, there are security, logistical and ethical concerns that must be address.
When it comes to corporate governance, the main thing to keep in mind is that the laws and regulations…
Speed, R. (2016). IT Governance and the Cloud: Principles and Practice for Governing Adoption of Cloud Computing. Isaca.org. Retrieved 15 August 2016, from http://www.isaca.org/Journal/archives/2011/Volume-5/Pages/IT-Governance-and-the-Cloud-Principles-and-Practice-for-Governing-Adoption-of-Cloud-Computing.aspx
Technopedia. (2016). What is the difference between cloud computing and mobile computing?. Techopedia.com. Retrieved 15 August 2016, from https://www.techopedia.com/7/29697/technology-trends/what-is-the-difference-between-cloud-computing-and-mobile-computing
Post: Global Conflict: Mass Population Migration and the EU
The Brexit crisis reflects ongoing tensions in the European Union related to a complex of problems including the decreased relevance of national sovereignty within the European Community and also the increased relevance of immigration policy in light of mass population migrations into Europe. Individual European nations have also contended with domestic crises linked to the same cluster of issues, which at the risk of oversimplification can be boiled down to economics. The Greek economic crisis shows that while national and cultural identity do matter, economics matters far more in the fomentation of international crises. Crises generally emerge over perceived or real resource scarcity: those resources can be tangible such as land, water, oil, money, or minerals. However, often those resources are intangible or symbolic as with power, clout, and status. The United Kingdom has for centuries wielded considerable power, retaining global…
Chua, A. (2014). A world on the edge. Wilson Quarterly, 38(1), 101-122. http://library.esc.edu/login?url=http://search.ebscohost.com/login.aspx ? direct=true&db=a9h&AN=94318652&site=ehost-live
Fox, J. (2001). Two civilizations and ethnic conflict: Islam and the West. Journal of Peace Research, 38(4), 459- 472. Retrieved from: http://www.jstor.org.library.esc.edu/stable/424897?seq=1#page_scan_tab_contents
Huntington, S. P. (1993). The Clash of Civilizations. Foreign Affairs, 72(3). 22-49. Retrieved from: http://eds.a.ebscohost.com.library.esc.edu/ehost/pdfviewer/pdfviewer?sid=d984c31e-a98a-4d90-a8bc - 408bb26072f4%40sessionmgr4007&vid=1&hid=4105
The concept of the business cycle is that the rate of growth in an economy will shift over time, but in a more or less repeatable pattern. The structure of the pattern is, roughly, that economies will grow quickly, then a turning point will occur and the economy will turn into recession. After a trough, the business cycle will begin anew with a fresh period of growth.
For most Western economies, characterized by rising populations, intensive resource exploitation and continuous technological improvements, are on a long-run growth trend in their GDP. The business cycle should be identifiable outside of that trend. The degree of influence between business cycles and the trend is subject to debate. For example, in the United States the recession of 2008-2009 is believed by some to have permanently set the country's growth trajectory below where the previous trendline was -- so the business cycle will have…
Firearms Legislation and Firearms-Related Violence in Europe
This paper examines the relationship between firearms legislation and gun-related violence across countries and regions in Europe. The focus of the paper is to identify possible sources of literature to help answer questions regarding whether legislation is an effective tool in reducing firearms-related violence. The paper focuses on variance of gun violence rates throughout Europe, gun legislation, and possible national strategies for addressing the issue of gun violence. It finds that there are many variables that impact regions and can effect greater or lesser rates of gun violence -- factors such as education, culture, economic stability, political instability, and so on. No two countries are the same in terms of people, customs, traditions, ideals, and execution of the law. It is therefore important to better understand how culture plays a role in determining the effects of firearms-related violence in throughout Europe. This information…
As a Western manufacturing company of English Language products considering a major investment in one of the BRICS countries—preferably China—it is advisable that the company first possess an assessment of the feasibility of achieving the company’s aims in a country like China, which currently is in a trade war with the U.S. that shows no signs of letting up. Moreover, an examination of the overall context of globalized society in the 21st century will help the company to determine whether this investment would be particularly strategic at this time or not. While the general business environment in China (in the widest sense) is positive, there are a number of obstacles that Western companies face when attempting to enter the Chinese market. Cultural and institutional challenges make up the bulk of these obstacles, but, as other companies have overcome them in the past with the right approach, it…
Spillover Effect on the Stock Market and Bond Prices in Relation with GARCH
This study examines the spillover effect between bond and stock markets in the U.S. using GARCH. The finding of a unidirectional spillover flow from bonds to stocks in the U.S. is discussed in the light of new marketplace variables that have been introduced into the markets in the previous decade. These variables include the rise of HFT, algorithm-driven trading, and central banking interventionism via unconventional monetary policy. The effect on forecasting volatility, price and return of asset classes, studied through the lens of other commodity price movement and volatility—such as oil and gold markets—creates a compelling picture for why GARCH models may need to be reworked to incorporate new data regarding the new ways in which the 21st century marketplace is using technology and central bank interventionism to shape market movements and market outcomes.