Kallum Pickering - Joh. Berenberg, Gossler & Co.


Last quote by Kallum Pickering

I don't see much merit to the story that an increase in Conservative seats following 8 June election May will dilute the hard-Brexiteers on the Conservative backbenches, enabling May to go for the softer Brexit that she wanted all along. No major change to my sterling forecast. Part dollar story, part Brexit story; markets pricing in 2018 Fed rate hikes and the potential for early clashes in the Brexit negotiations suggests that sterling will head a little lower from here for the rest of the year.feedback
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Apr 19 2017 Brexit
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Kallum Pickering is associated, including U.K. and EU. Most recently, Kallum Pickering has been quoted saying: “As our base case, we look for a 25 basis point first rate hike in the second quarter of 2018, with a 30% chance the BoE raises the bank rate earlier. After today's data release, risks to that call are skewed towards the BoE hiking sooner rather than later.” in the article Rising food and fuel prices hoist UK inflation rate to 2.3%.
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Kallum Pickering quotes

The likelihood of messy politics at the start of the Brexit negotiations – likely mid-2017 – will keep the pound down versus the dollar and on a trade-weighted basis during 2017. Cable could easily end 2017 below 1.20. Remember, markets hate uncertainty, and for now, Brexit remains a big black box both economically and politically – for the next couple of quarters at least, sterling will suffer as a result of that.feedback

The long-term outlook for sterling will be heavily influenced by the outcome of the Brexit negotiations. A soft outcome for Brexit would mean a less negative long-term impact growth and a stronger long-term rise in sterling.feedback

There is a low-probability the BoE will alter its stance during 2017. The UK is set for a mediocre year of growth (circa 1.5%) as Brexit uncertainty hangs over the economy, employment will remain at a high level while inflation rises from the sterling depreciation – this is not the sort of mix that would warrant a policy change.feedback

As it stands, (British Prime Minister Theresa) May's hard-Brexit rhetoric and lack of sufficiently strong pro-growth policies suggest supply could be damaged more than demand. Brexit could thus be inflationary in the long term and push the BoE policy rate higher. Markets may begin to ask if the BoE will shift to this stance as early as next year if the economy continues to do well in the near term.feedback

It would be good for markets if Hammond would present specific short and medium term measures to offset he shocks of Brexit.feedback

While prices for imported goods such as fuel and food will be affected the most, households are unlikely to cut back on their consumption as these are essential goods. Instead, the rise in costs for these goods will eat away at the remaining income that would normally finance discretionary purchases such as leisure, retail, hotels and the like.feedback

In a world of sluggish nominal wage growth and low rates of return on savings, (rising inflation) is especially bad.feedback

May and her cabinet had pursued Brexit under the assumption that the prime minister had the authority to trigger 'Article 50' under royal prerogative. Without such power it is unlikely that the government would be in a position to fully pursue a hard Brexit – one where the U.K. placed strong restrictions on flows of migrants from the EU and did not keep a high level of access to the EU single market.feedback

(It) has the potential to materially change the calculus of Brexit.feedback

We expect the BOE to use (Thursday's) November inflation report as an opportunity to take stock on the state of the economy and the effectiveness of its policies, while sending a strong signal that the BOE stands ready to do more if economic conditions were to deteriorate.feedback

The BOE's decision to provide extra liquidity around the vote and then to announce a suitably large monetary stimulus in response to the sharp downgrades in the market's assessment of the U.K.'s economic outlook was appropriate. But the U.K.'s better-than-expected economic performance since the vote has removed the need for the BOE to act again.feedback

We will be looking closely at the BOE's assessment of the forthcoming inflationary headwinds to consumption, the impact of 'hard Brexit' fears on investment, and, if any, the policy implications of the recent weakening of sterling.feedback

I'm more interested in the second estimate in a couple of weeks' time. It will show how business and consumers reacted to the vote.feedback

The bigger-than-expected drop in sterling has done a lot of the work for the Bank of England.feedback

The uncertainty about the conditions under which U.K. based firms will access the EU market post-Brexit, especially relating to passporting, will weigh heavily on business sentiment.feedback

If the BoE does too little, say, just a rate cut, that would be insufficient to have any meaningful positive effect on demand and risks causing a knee-jerk re-pricing in financial markets. If the BoE does too much, it could spook households and markets into thinking the economy is in worse shape than it is. Coming out too hot could be worse than coming out too cold.feedback

We see a 60 percent chance that the nine-member MPC votes to cut the bank rate, if so, probably by 25bps.feedback

There is a chance the MPC holds for now and instead opts to send a dovish signal that the bank will ease monetary policy three weeks later at the August Inflation Report.feedback

This is the (BoE's) key concern when it comes to wages and inflation as this relationship can become self reinforcing -- lower earnings drive lower inflation and vice versa.feedback

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