About that Brexit Market Drop… It’s Still Happening

With all the hype surrounding the US election and the Chicago Cubs pursuit of a long overdue world series pennant, it seems like Brexit happened ages ago. And you could forgive those following US markets near their all-time highs for thinking it was just a blip on the radar.

But the British Pound is here to remind us all that the Brexit vote fall out is alive and well, thank you.  While these sorts of shocks to the system can sometimes resemble a quick sell off, followed by a new normal at the lower level, we’re not seeing that here. The Pound was down -8.81% in October, and is down -10.29% from the lows the day of the Brexit vote {Disclaimer: Past performance is not necessarily indicative of future results}. That’s not a shock… that’s continued selling pressure from those concerned Brexit may have lasting effects on the British economy.

british-pound-chart(Disclaimer: Past performance is not necessarily of future results)

The most recent fall to new multi-decade lows came on news there might be a “Hard Brexit” from the EU, meaning rip the band-aid off approach versus a slow and steady unwinding of policies relating to the EU. This “hard Brexit” is being taken seriously when you consider that the U.K. government only wants U.K. nationals to contribute work and analysis on Brexit.

Across the pond, the U.S Dollar Index (aka the greenback) is up 2.6% thus far through October, back at its March highs. This makes sense when you consider the greenback is measured against six different currencies, including the British Pound. Meanwhile, a trending British Pound is a good thing for systematic Managed Futures managers that trade currency markets, while also contributing to a trending U.S. Dollar index which does so much more for commodity market prices and trends there (see our infographic on commodity price movers here).

The last time we witnessed an environment of a trending U.S. Dollar was back in 2014, when Managed Futures as a whole experienced some of its best performance to hit new all-time highs. {Disclaimer: Past performance is not necessarily indicative of future results}. But it wasn’t because every manager was long the U.S. Dollar, it was because the way the Dollar affects the commodity markets and their prices. It might not be the first thing you think about, but the commodity markets being priced in U.S. Dollars means commodity markets can move based solely on the movement of the dollar, without the typical supply and demand levers.

So while US stock and bond markets seemingly shrugged off Brexit as a non-event after the initial worldwide panic – continued weakness in the Pound driving the US Dollar higher could result in multiple commodity markets moving as well, meaning Brexit may still play a bigger role than previously imagined.

Stay tuned!

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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