US dollars (2)

The pound has seen its best week since 2009, while S&P 500 suffers worse losing streak since 1980.

Maybe you can put it down to the so-called elites striking back – whoever the elites are. The British High Court ruled that the government could not instigate Article 50 without an Act of Parliament, and the markets loved it – well, some of them did.

In the US, fears are building that the US election may be inconclusive, and stocks suffered. The S&P 500 lost value for nine days on the trot, the last time it managed that was in 1980.

It is worth bearing in mind that in absolute terms, the changes were not that dramatic. At the time of writing (08.30, 6th November) the pound is up around a cent against both the dollar and euro from the morning before the High Court decision concerning Article 50. But it is still below the level seen at the beginning of October.

As for the S&P 500, it may have fallen for nine days in a row, but no one day saw significant falls, and even the cumulative falls over that period are quite modest.

Or take the Dow Jones, which mirrors the S&P 500. This is around 400 points short of the October high, or down by around 2.5%. The FTSE 100 has lost ground too. In fact, it is down some 6% from the October high, but then the October high for the UK’s main stock index was also very close to the all-time high, and maybe the index was due a fall.

The pound is up because the markets feared that the UK government had chosen to take the UK down the hard Brexit route, they are speculating that thanks to the High Court ruling, parliament may put the brakes on, and we may end up with a softer form of Brexit. Or, as has been suggested here, we may get a more open form of Brexit.

As for stock markets, the events of the year 2000, are beginning to haunt the markets. In that year, the results of the US election came down to a tiny number of votes in Florida. Across the US, the democrat candidate Al Gore received nigh on 500,000 more votes than George ‘Dubya’ Bush. But Mr Bush won more votes in the key swing states, and the Electoral College voted in his favour. But only after a re-count, and after all kinds of legal rows, and disputes, and after the US Supreme Court got involved, after 30 days of electoral chaos, and after the S&P 500 lost around 5% of its value.

The odds are that either parliament will back Theresa May, or we will see an election, and the electorate will back Mrs May, and the pound will then carry on falling.

As for stocks, providing there is a clear, out-right victory in the US election, they will probably recover. The markets do have their preference. And in the interest of balance, this article will not say who that person is, but suffice to say, if she does win, stocks may rise by quite a bit.