The Brexit Declaration on Future Ties: A Guide to What It Says


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23 November 2018



Video commentary for November 22nd 2018



Eoin Treacy's view

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

Some of the topics discussed include: Happy Thanksgiving, central bank balance sheet contraction at least pauses, emerging markets stabilising, gold steady, oil still trending lower, bargain hunters starting to appear. 



The Brexit Declaration on Future Ties: A Guide to What It Says

There is a great deal of commentary at the moment about Brexit so let’s look at what has been proposed in the draft agreement. Here is a section:

The declaration opens up the prospect of adopting technological solutions to facilitate "the ease of legitimate trade" - including across the Irish border - calling for the
use of "all available facilitative arrangements and technologies".

"Facilitative arrangements and technologies will be considered in developing any alternative arrangements for ensuring the absence of a hard border on the island of Ireland on a permanent footing," it says.

It envisages "a spectrum of different outcomes" in terms of the practical implementation of checks and controls on  movements across borders.

Financial services
The declaration calls on both sides to start assessing  one another's regulatory frameworks as soon as possible after Brexit, with a view to being able to declare them "equivalent" before the end of June 2020.

Freedom of movement
The principle of freedom of movement of people between  the EU and the UK will no longer apply. The two sides will aim to provide through their domestic laws for visa-free travel for
"short-term visits".

They will also consider future conditions for entry and stay for purposes such as research, study, training and youth exchanges.


Eoin Treacy's view

The title of an article by Matt Chorley for The Times “It is time to shoot the Brexit unicorns” reflects the UK government’s attempts to convince ideological purists that this is the only option available to them.

It’s only a matter of time before someone starts quoting the Rolling Stones. You can't always get what you want

You can't always get what you want
You can't always get what you want
But if you try sometimes you just might find
You just might find
You get what you need, oh yeah



Beijing to Judge Every Resident Based on Behavior by End of 2020

Thanks to a subscriber for this article from Bloomberg news which may be of interest to subscribers. Here is a section:

China’s plan to judge each of its 1.3 billion people based on their social behavior is moving a step closer to reality, with Beijing set to adopt a lifelong points program by 2021 that assigns personalized ratings for each resident.

The capital city will pool data from several departments to reward and punish some 22 million citizens based on their actions and reputations by the end of 2020, according to a plan posted on the Beijing municipal government’s website on Monday. Those with better so-called social credit will get “green channel” benefits while those who violate laws will find life more difficult.

The Beijing project will improve blacklist systems so that those deemed untrustworthy will be “unable to move even a single step,” according to the government’s plan. Xinhua reported on the proposal Tuesday, while the report posted on the municipal government’s website is dated July 18.


Eoin Treacy's view

Anyone who has ever attempted to teach anything to anyone will be familiar with the experience that what you think of as important may not gel with what your presumed student thinks. As a teacher you never really know if you are getting your point across.

I was thinking about that while in Singapore last month. The country has had unparalleled success in turning a backwater into a private banking powerhouse through a commitment to improving standards of governance and rule of law. However, Singapore has also been the subject of much criticism for the strict social control policies they pursued on the way to prosperity. China has long regarded Singapore as a case study so what did they learn?



Email of the day on central bank balances sheets

On the Morgan Stanley research document, you posted on Monday, there was "the most important chart in the world" as you describe it (QE globally). The "6-month rate of change" scale on LHS caught my attention. Recently, this QE tightening "rate of change" has moved upwards. Is this an early sign that CBs are starting to shy away from their QE tightening? If so, this is bullish for an equity market discounting future tightening. Maybe the tea leaves are not clear, but they must be monitored.


Eoin Treacy's view

Thanks for this email which as you highlight raises the very important question of whether central banks have had enough of tightening after taking $1.5 trillion out of circulation since March.



Long-term themes review October 29th 2018



Eoin Treacy's view

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Let me first set up the background; I believe we are in a secular bull market that will not peak for at least another decade and potentially twice that. However, it also worth considering that secular bull markets are occasionally punctuated by recessions and medium-term corrections which generally represent buying opportunities.

2018 has represented a loss of uptrend consistency for the S&P500 following a particularly impressive and persistent advance in 2016 and 2017. Many people are therefore asking whether this is a medium-term correction or a top. There is perhaps no more important question so let’s just focus on that for the moment.


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