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Old allies turn tough: How the EU will react to Theresa May's request for a Brexit extension

Old allies turn tough: How the EU will react to Theresa May's request for a Brexit extension

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15 March 2019



Video commentary for March 14th 2019



Eoin Treacy's view

A link to today's video is posted in the Subscriber's Area. 

Some of the topics discussed include: 
Pound continues to hold its breakout, Bond yields contracting globally, Indian Rupee breaks above the trend mean, Australian Dollar tests its lows, Industrial resources ease with China, but commodity exporter stock markets outperforming. Wall Street quiet.



Old allies turn tough: How the EU will react to Theresa May's request for a Brexit extension

This article by James Crisp for The Telegraph may be of interest to subscribers. Here is a section:

One senior EU source predicted that the leaders would be uncompromising and some, if not all, would lean on the prime minister to extend Article 50 as long as possible.

“Every time Mrs May has spoken to the leaders, their final decision has been tougher than was predicted by their officials,” the source said, pointing out the prime minister’s dismal record at the European Council.

“None of the leaders want to be blamed for a no deal Brexit," said one EU diplomat, “but they know that if they will be by their businesses if there is one.”

It is up to Donald Tusk, the president of the European Council, to broker a consensus between the EU-27.  On Thursday morning, he made it clear he would ask the heads and state of government to look favourably on a request for a long extension, understood to be between nine months and a year, which opens the door to a general election or second referendum.

Meanwhile influential MEPs such as Guy Verhofstadt and Manfred Weber are adamant that a British extension cannot hijack the European Parliament elections.

Broadly, countries with socialist governments hanker for a longer extension in the expectation of more left-wing British MEPs being elected in upcoming European Parliament elections, while centre-right governments fear a Eurosceptic surge if Britain is forced to run the vote in May.

Officials in Brussels, veterans of many marathon late night summits, are fond of saying, “you can never predict what will happen when the leaders get together”.

But here is a look at the EU’s movers and shakers on Brexit stand on extension today.


Eoin Treacy's view

The decision to hold a third vote on May’s deal on the eve of the summit with European leaders is a cynical, though perhaps not unexpected move, by the UK government to have another stab at getting the deal passed. That is aimed at imposing a “my deal or no Brexit ultimatum” on the hold outs in the Eurosceptic movement. It also puts pressure on the European side since they will not know whether the deal is to be accepted or not until the night before they propose their conditions for an extension.



DHFL, Wadhawans And Ownership Webs

This article by Aman Kapadia for Bloomberg Quint may be of interest to subscribers. Here is a section:

This story started with the loans made by DHFL to four developers. When the developers bought a stake in Darshan Developers, the money moved to Kyta. Kyta used most of the proceeds, Rs 1,324 crore, on a joint venture, details on which are not available in the company’s filings.

The remaining Rs 100 crore was used to repay unsecured loans it had received from unknown sources.

In February, BloombergQuint asked DHFL about the use of its loan funds by these developers and the connection with Wadhawan entities. The company said it was awaiting the outcome of an internal investigation into the Cobrapost allegations.

"You are aware that over the last two weeks, we have issued various media statements as also clarifications. The clarifications issued by us clearly sets out the motivation of the complainant, and also states that statements, allegations and accusations contained in the complaint are utterly false and baseless.


Eoin Treacy's view

As happens with all major collapses, the details of the wrongdoing and the untangling of the web of deceit that led to the collapse happens well after the decline. Dewan Housing Finance collapsed abruptly from its September peak, falling from INR700 to its recent low of INR100 as the full extent of the misallocation of capital started to become clear. That was helped along by the RBI stepping in to instil discipline in the banking sector which resulted in a number of privately held banks pulling back sharply.



A quantum experiment suggests there's no such thing as objective reality

This article from the MIT Technology Review may be of interest to subscribers. Here is a section:

They use these six entangled photons to create two alternate realities—one representing Wigner and one representing Wigner’s friend. Wigner’s friend measures the polarization of a photon and stores the result. Wigner then performs an interference measurement to determine if the measurement and the photon are in a superposition.

The experiment produces an unambiguous result. It turns out that both realities can coexist even though they produce irreconcilable outcomes, just as Wigner predicted.  

That raises some fascinating questions that are forcing physicists to reconsider the nature of reality.

The idea that observers can ultimately reconcile their measurements of some kind of fundamental reality is based on several assumptions. The first is that universal facts actually exist and that observers can agree on them.

But there are other assumptions too. One is that observers have the freedom to make whatever observations they want. And another is that the choices one observer makes do not influence the choices other observers make—an assumption that physicists call locality.

If there is an objective reality that everyone can agree on, then these assumptions all hold.

But Proietti and co’s result suggests that objective reality does not exist. In other words, the experiment suggests that one or more of the assumptions—the idea that there is a reality we can agree on, the idea that we have freedom of choice, or the idea of locality—must be wrong.


Eoin Treacy's view

I apologise if this going to sound a little wonkish but there are important considerations raised that have a direct impact on the nature of markets and crowd psychology.

Every electrical engineer is taught that you change a system by measuring it. The change is obviously very small but there are phase modulations that occur when you interfere with the system to measure it. That is a clear fact.

At The Chart Seminar, I often talk a little about Heisenberg’s Uncertainty Principle which is that the more you know about the position of the particle the less you know about its velocity.

Then we have the above piece citing the assumption that the choices people make do not have an influence on the choices other make. In the markets we absolutely know that the choices other people make have a definite impact on the decisions of everyone who has yet to make a decision. We also know that the more a winning strategy is seen to work the greater the reliance investors place on it.



Eoin's personal portfolio: precious metal long initiated March 8th



Eoin Treacy's view

Details of this trade are posted in the Subscriber's Area. 



2019: The 50th year of The Chart Seminar



Eoin Treacy's view

I have had word from the inestimable Mrs. Fuller that the London Philharmonic Orchestra are planning a memorial concert on October 5th at the Royal Festival Hall. It is envisaged that there will be drinks and canapes afterwards. Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th.

I also plan on holding a New York event, potentially in June, and am in discussions with a partner in how best to organise it.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected].  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.








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