Poor investment research

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John Redwood’s latest blog on the sloppy research which underpinned Project Fear.

The run up to the referendum was characterised by some very sloppy investment research, often put out by large US corporations who wanted to side with Remain. Instead of wisely staying neutral and seeking to put out balanced well informed commentary some of them put out scare stories to buttress Project Fear. Few of them seemed to read the Consolidated Treaties, or bother to understand the intellectual and research underpinnings of the Leave campaign. Most of them put out forecasts that had plenty of bad cases for Leave but no good cases. Some of them have had to eat their forecasts already, as they anticipated a sharp fall in shares, output and much else immediately following a Leave vote.

Since the vote there have been huge short positions taken out against the pound sterling, as certain market participants have decided that looked like the easiest bet to place that would allow a negative view of the UK’s future. Whichever institutions have done it they remain short and are desperate to try and talk the pound down further. They soon gave up on shorting bonds, as bond prices shot up contrary to some of the original expectations. Nor could they long sustain their bear positions on UK equities. With the Bank of England they gave up on talking the FTSE100 down, but tried for a bit longer to resist the upwards momentum of the FTSE 250. Anyone who followed the investment views of Remain would have missed out on a sharp rally in UK asset prices since June 24th’s mark down. Now we hear from unnamed sources that the damage is delayed, that a “hard” Brexit would be bad news, that maybe some businesses will leave the UK. Doubtless some of these briefers were briefing something similar in the run up the Euro, when we were told London would lose out badly if we did not join.

One US bank after the vote put out a piece of badly researched commentary attacking what they said were my views. They clearly had not read much of what I have written and published on Brexit, and did not bother to ring me to check their allegations. They claimed I did not want the UK to send an Article 50 letter, failing to observe that I did and had published a draft letter to send! They also thought I would be happy to lose passport access to the single market, ignoring the extensive comments I have made on how and why I think we can keep the present passports or the equivalent.

I have written to them asking them to correct their material as I thought they would wish to observe professional standards and would wish to reflect properly the views of anyone they were commenting on. Their failure to do so so far leads me to write this piece. I think it is bizarre that a well resourced investment bank cannot be bothered to check the facts at best,but thinks its clients and the wider public need an incorrect appraisal of my views.

You can view the original article here.


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