London has FALLEN

The movie “London has fallen” was released this year and it was (and still is) a high impact film that I thoroughly enjoyed…

…Little did the producers know (nor did I) is that the movie’s name would speak volumes in the coming months due to… drum roll… BREXIT.

  1. (Sudden)Death versus (Forced)Resignation

In the movie, the British Prime Minister dies SUDDENLY while he was undergoing surgery.

In reality, this could be a correlation to the fact that the current PM David Cameron who SUDDENLY chose to step down from his seat due to the vote to leave the European Union which left his team and most certainly himself in total SHOCK.

You can read the PM’s speech here British PM David Cameron’s Resignation Speech 2016

2.Attack on World Leaders versus Attack on World Economy

Since the British PM SUDDENLY dies in the movie, all the world leaders (I would figure most of them showed up instead of all) are forced to attend his funeral with little preparation in terms of security. They are SUDDENLY attacked  and all the world leaders in attendance are killed. Later in the movie, you get to understand why this attack occurred and guess what? It was PERSONAL.

Coming back to reality, the correlation is clear – towards the days approaching the Brexit ‘stay or leave’ vote the world was in a frenzy! Stock markets were volatile and the currency market was buzzing – pure speculation was the order of the day while massive hedging was taking place. The vote came as a major shock to everyone (actually most with vested interests in the UK and the policy makers) but this was not entirely a shock to some.

The vote was left to the ‘ordinary mwananchi’ who were disgruntled especially by the   ‘low wage’ immigration workers into the UK from the EU who took up most of their jobs leaving many unemployed and – again – disgruntled. It was PERSONAL to them so it is no surprise they would vote to leave the EU since they thought they had the power to take matters into their own hands for their own gain… later realizing – it is not all sunshine and flowers on the other side.

3. Destruction of London versus The Great fall of the British Pound

In the movie, London is totally destroyed! Property was destroyed and the recovery process (later in the movie – though swift – was painful). It was almost like an apocalypse (dark ages even) and the shock of it shattered the Nation. Fear and panic spread through out the whole of the UK. I can only imagine what the implications were for the economy… but the again… I can only imagine :).

In the current and very real situation, Brexit has taken a big hit on the British Pound (and the stock and bond market). The Pound fell to a 31 YEAR LOW crashing to below $1.30.

In Kenya, it is no different as the Pound has fallen below GBP/KES 140 and today (8th July 2016) the CBK published that it stood at GBP/KES 130.53. In the past 2 years, the British Pound has only fallen below GBP/KES 140 mark during the first quarter of the year 2015 (and we all know the year 2015 was a tough year – in generalthereafter rebounding to a high of GBP/KES 163. A continued downward trend is highly likely and I would not be surprised if it hovered around GBP/KES 125.

A good gamble I would say. (My cue to rush to a forex)

GBP to KES
Source: CBK, HBBGlobal

4. The survival of the US President versus The gain for the US Economy

In the movie (and I am somewhat not surprised), the US President goes on and survives every attack thrown at him. His ‘main’ agent does everything in his power to ‘save’ the US President and there is a lot of high impact action during this time. Most of the time I was bracing my seat – it was definitely thrilling.

Now for the reality check… you know how it is considered that the US of A is a super power? Well, if the after shock of Brexit has anything to show for it then it is exactly that. The US dollar has remained resilient after the fact and continues to gain or remain fairly stable against other Nations currencies. Investors are rallied for US bonds as they are considered ‘safe assets’ thus lowering the yield on the bonds. This signals that if there was a world economic crisis then the definite place for investors to ‘save themselves from oblivion’ is in the US economy. They would rather bank on that.

US gvt bond yield

Parting Shot

Markets can be very puzzling but making connections is key. There is obviously more to Brexit than what I have reviewed above so it is worthwhile to check it out and learn more.

Knowledge is power.