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A sticky patch for sterling, David Smith, Economics Editor, The Sunday Times

October 2016


Nothing divides people quite like a fall in the pound. The one sure effect of the Brexit vote on June 23rd is that sterling is a lot weaker than it was. Yes, there have been oddities along the way, including the so-called “flash crash” that saw sterling fall by 6% in the space of a couple of minutes in the early hours of October 7 before recovering some of its composure. The trend, however, has been down, despite the better-than-feared economic data since the referendum I discussed here last month.

 I said that people respond in different ways to the weak pound. For stock market investors, sterling’s weakness seems to be an unalloyed blessing. When the pound falls, most of the time the FTSE-100 rises. This is partly a straightforward translation effect; the sterling earnings of the mainly international businesses quoted on the London market are boosted by a weaker pound. Some of it reflects a genuine belief that the pound’s fall will mean a better future for exporters.

There are also two schools on whether a pound in the low $1.20s, and apparently heading towards one-for-one parity with the euro, is merely an overvalued currency returning to earth, or the pound falling to bargain-basement levels at which it is significantly undervalued and at which level UK assets are unrealistically cheap. On this, the evidence is fairly clear. On average over the past 10 and 30 years, the pound has been in the mid $1.60s, so current levels are very low. Complex calculations which attempt to define fair value for the pound suggest it should be above $1.50 and in the mid €1.20s. It is, therefore, unusually weak, in fact the weakest it has been against the dollar since the mid-1980s; 31 years. Then, the pound was – thanks to North Sea oil – still regarded as a “petrocurrency”, and suffered from the weakness of oil prices. Now, the pound’s weakness reflects concerns over a “hard” Brexit, and the damage that could do to Britain’s medium and long-term prospects. It also reflects the perceived weakness of the British economy, as reflected in a record balance of payments deficit.

Brexit - the feedback so far from Richmond's UK forums

October 2016

Daniel-Hannan.pngAs our August Richmond Research (published in our September newsletter) showed, Richmond’s customers are more negative about Brexit than the voting public.

The reception received by Brexiteer MEP Dan Hannan who opened the Richmond Forums on board the P&O Cruises' ship, Aurora, on 5th October was not warm.  Dan’s message was about where we go now that Brexit is decided and his vision is one of free trade and low taxes to deliver prosperity for all.

Half of RE delegates feel that Brexit will not affect their revenues or profits, but out of the other half roughly 40% think they’ll go down and only 10% think they’ll go up. In the meantime it is the uncertainty that seems the main issue for most people.

Talking somewhat anecdotally based on individual conversations and discussion groups opinion seems to be:

Currency is the most tangible issue so far. Exporters are happy, importers not. Some companies are both benefiting and suffering.

The lower exchange rate for sterling will flow through in terms of higher food prices in the shops over the next few months as current stocks are exhausted and as food importers hedging positions come to an end.  Inflation for imported food is on the way.

Uncertainty is the next biggest issue.  Simply not knowing what form Brexit is going to take is causing all sorts of problems and will continue to do so for the next 2 to 3 years and maybe longer.

Other considerations depend too much on all sorts of variables which will only be understood as Brexit unfolds. At the moment they just fall in the uncertainty category.

There are real concerns over labour requirements and immigrant workers.  Various companies need foreign workers, there simply doesn’t exist sufficient UK resource.

Logistics and supply chain: trans-Atlantic differences between US & UK markets

October 2016


Two Richmond Supply Chain Forums on the opposite sides of the Atlantic take place in UK in October and US in November. 

The top areas where delegates are looking to source new suppliers are:

UK                                                          US

Warehouse Management
Freight Road
Contract Warehousing
Freight - Sea
Warehouse Equipment
Supply Chain Optimisation
Freight - Air
Small Item Picking
Inventory Control
3PL Distribution / Warehousing / Shipping
Logistics Optimisation
Supply Chain Analytics / Data
Forecasting Scheduling & Planning
Inventory Optimisation
Process Improvement
Distribution Management Solutions
Demand Planning
Sales & Operations Planning
Procurement Solutions


To some extent the areas of interest reflect the different terminology used From another point of view the US market appears to be more sophisticated  in  terms of methodologies that professionals are using to improve efficiency and competitiveness. 

We will research both events as they happen to establish to what extent this is borne out by the meetings and discussions taking place, and how much value delegates get from attending their respective forums.

 Full information  on each event is available from: 

US rhouston@richmondevents.com


UK gtownshend@richmondevents.com



PIMS Switzerland: Where money managers put their money

October 2016


Managers of Family Offices and Investment Funds will meet in Bad Ragaz, Switzerland on 27th and 28th October at Richmond’s PIMS Switzerland Forum to discuss and consider where to put their money.

Clearly we don’t know where they will put their money but perhaps the areas that they want to discuss at the event, give us an indication of where investments are likely to go.

The top 2 areas are Actively managed funds and Equity funds, With 71% and 64% of delegates respectively interested.

Alternative Investments is 3rd with 56% interested

Next in terms of priorities are :

Absolute return funds
Exchange traded funds (etfs)
Hedge funds
Onshore banking (offshore banking is attracting less than half the interest)
Bonds – corporate 
Bonds – investment
Global emerging markets

When we look at the services that these managers are looking to source they include:

Online data/research
Fund administration / solutions / asset pooling

Democracy: for better or worse, Nick Turner

October 2016

Election MG 3455.JPG
CC BY-SA 2.0 fr, Link

This word is sacred to the politics of the free world.

But what does it actually mean and how successfully or unsuccessfully is it applied?

Even by definition, the word itself seems to be open to interpretations; “the belief in freedom and equality between people, or a system of government based on this belief, in which power is either held by elected representatives or directly by the people themselves.”

A second more limited definition refers to democracy as “a country in which power is held by elected representatives”

The obvious separation above illustrates the difference between the political philosophy and the actual declaration that a country by the mere fact of holding elections, somehow qualifies that country as upholding democratic political principles.

The reality is that the first application of the theory of democracy that gave rise to the definition ab initio was in Ancient Greece, and referred to by Aristotle.

His first caution about democracy was the obvious fact that if power is given to the poor majority in a democracy then human nature dictates that they would vote to take the wealth from the richest in society, and the solution he proposed to prevent that was the first reference to the creation of a welfare state.

Other fledgling countries, and western civilised nations have proposed, by fairness and rational discussion or sometimes civil war or revolution, that their heartfelt aspirations were to achieve a state of democracy.


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