INTERNATIONAL – Phillip Hammond is officially “outside the tent”, to use Lyndon Johnson’s phrase. After losing his job as UK Chancellor of the Exchequer and then his badge as a Conservative MP by rebelling against Boris Johnson’s hardball Brexit strategy, Hammond has kicked up an almighty stink by accusing Johnson of being in thrall to wealthy financial “speculators” who would actively profit from a no-deal Brexit.
Downing Street called it “an ugly smear”, Brexit-supporting hedge fund founder Crispin Odey called it “crap”, and Jeremy Corbyn’s opposition Labour Party seized on it gleefully as supportive of its own view: that the more chaotic and painful Brexit is for the UK economy, the bigger the “goldmine” for hedge funds.
Is there any truth in the accusation? Well, as a fresh exposé of hedge funds’ portfolio positioning and how that might “wag the dog” of the UK’s current Brexit strategy, its value is pretty much nil.
Are there investors out there betting against the pound, or UK stocks? Absolutely. Data from the Commodity Futures Trading Commission show the entire market is still underweight sterling. But much of this looks like rational positioning given Britain’s political chaos.
Bank of America-Merrill Lynch’s survey of global fund manager sentiment on UK stocks was already negative in June, before Johnson’s ascension as prime minister.