Going Long on Uncertainty
The natural resources of the United Kingdom, according to the CIA's World Factbook, are coal, petroleum, natural gas, iron ore, lead, zinc, gold, tin, limestone, salt, clay, chalk, gypsum, potash, silica sand, slate and arable land.
But that arguably misses the most important one: comedy. From Geoffrey Chaucer to William Shakespeare, from Monty Python to Ricky Gervais, a good laugh has long been one of England's most influential exports. Especially to America, where knock-offs are produced quickly but rarely deemed as funny as the original.
In our Friday review of the most important financial news of the week, it's obvious that the comedy column of the current account is showing a huge trade surplus for jolly old England. That the humor is happening hand-in-hand with perhaps the darkest moment in the nation's postwar history is not a bug, it's a feature of British comedy. Gervais, in describing British humo(u)r five years ago, said: "Failure and disappointment lurk around every corner. This is due to our upbringing. Americans are brought up to believe they can be the next president of the United States. Brits are told, 'It won’t happen for you.'"
It's certainly not funny to everyone involved. Not to the British millennials whose passports may be far less powerful in the future. Or to global financial firms whose ability to keep passporting services to all of the EU from London headquarters is at grave risk. It's probably not funny to non-British CFAs who were forced to turn away from dividend discount models to take a crash course on the Benny Hill slapstick that is British politics.
On the syllabus for that course should be Sarah Lyall's portrait of Boris Johnson this week, as well as her 2002 profile: ''Beneath the carefully constructed veneer of a blithering buffoon,'' Johnson said of himself, ''there lurks a blithering buffoon.'' Also on the must-read list before you hit the beach is BuzzFeed's wrap-up of the memes being produced following "The Most Ridiculous Morning British Politics Has Ever Seen," with some speeches in Parliament carried live even on U.S. cable news channels, as lawmakers got down to the crucial work at hand. You know, like inviting Lindsay Lohan to turn on the Christmas lights in Kettering this year, "thus redeeming her political reputation."
Comedy doesn't work if you know what's coming, so perhaps the one variable most correlated to humor is uncertainty. Analysts and academics have tried to quantify the unquantifiable nature of uncertainty to determine how important it is as a catalyst in markets (it appears to be very important). So many turned to obscure gauges known as economic policy uncertainty indexes, which scour newspapers for references to policy uncertainty.
And everywhere you looked, there was a bull market in uncertainty. Needless to say, uncertainty spiked to a record high in the U.K.:
The uncertainty gauge for Europe also reached a record (impressive for a continent that's long been exporting vast amounts of uncertainty). Even the reading for the U.S. reached one of its highest levels ever: