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So Why Are Builders, Banks & E A Shares Up, What Does The Market Think Will Happen?

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Why would Leadsom being rumoured to be Chancellor be a good thing for house builders, if it's a bad thing for her to be running as PM, as we've seen today from all the housebuilder shares...?

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Why would Leadsom being rumoured to be Chancellor be a good thing for house builders, if it's a bad thing for her to be running as PM, as we've seen today from all the housebuilder shares...?

It is said that she was behind HTB.

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We'll be nominally out of the EU, with some half baked deal which will allow us to discriminate on benefits, but may as well still be a member otherwise.

Markets up because after a little more than 2 weeks, normal service has been restored.

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If May were a Brexiter you'd expect the same shares to now fall again, now that she's going to be PM by Wednesday. But they won't will they? I bet they rally tomorrow too.

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They are attributing way too much to supposed political stability of Mrs May.

The actual finance situation of the UK is still horrendous and getting worse.

Emergency budget next month.

All benefits stopped to EUers.

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The mood on this forum isn't half volatile!

Of course the UK is leaving the EU, it's as near as you can get to a dead cert.

And so what that the stock market has had a buoyant day? Certain sectors, like house builders, banks, and commercial property developers are still down 10, 20 or even 30% on where they were just a few months ago.

Personally I'm taking the opportunity to reshuffle my share portfolio to get more into cash and ultra defensive companies. It'll be over two years before the Article 50 negotiations come to an end, that's plenty long enough for some stomach churning down days to come along when I'll think about buying back in. And over and above all that there is still the hard, relentless fact of S24; that'll be grinding away at the business model of leveraged BTL landlords every single day from now until the end of the 2020/21 tax year.

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The mood on this forum isn't half volatile!

Of course the UK is leaving the EU, it's as near as you can get to a dead cert.

And so what that the stock market has had a buoyant day? Certain sectors, like house builders, banks, and commercial property developers are still down 10, 20 or even 30% on where they were just a few months ago.

Personally I'm taking the opportunity to reshuffle my share portfolio to get more into cash and ultra defensive companies. It'll be over two years before the Article 50 negotiations come to an end, that's plenty long enough for some stomach churning down days to come along when I'll think about buying back in. And over and above all that there is still the hard, relentless fact of S24; that'll be grinding away at the business model of leveraged BTL landlords every single day from now until the end of the 2020/21 tax year.

No more volatile than the Conservative party.

Builders shares rose sharply after Leadsom bowed out, why?

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No more volatile than the Conservative party.

Builders shares rose sharply after Leadsom bowed out, why?

Whatever May may do, she will at least do it with a modicum of competence given her experience at the highest government levels - whereas Leadsom appeared totally out of her depth and would have been a total liability

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May is more of the same when people wanted change. The events today underline why.

Yep - she's part of the establishment and also a Remainer. More of the same. I don't think things will change in the UK except get slightly worse as each year slips by.

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There is no doubt in my mind we will get Brexit and probably sooner than expected.

She will want to get this out of the way and with things looking up as soon as possible in order to look good for the next election in 4 years.

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No more volatile than the Conservative party.

Builders shares rose sharply after Leadsom bowed out, why?

It's a good question.

They're being tugged very hard both up and down, on the one hand a house builder like Persimmon is yielding something over 6% at the moment. That's a hell of an attractive dividend when bonds and bank accounts are giving almost nothing...but its only attractive if it can be maintained. Stability at the top of government is a reassuring signal for people who were delaying a house purchase so the market gets a warm feeling that maybe the party can roll a little longer.

But on the other hand there's the argument that S24 will hurt well over half of Persimmon's customer base (BTL landlords). Which is why their share price actually peaked way back on 26th February at 2219p, where as today it closed at only 1521p and that's despite the 7% gain today.

It's also interesting that, after several years of meteoric share price gains, Persimmon first started to falter early in 2015 when S24 was crystallising.

So it's important not to confuse a relatively small upward jolt on one trading day with the massive and sustained share price collapse that Persimmon has suffered over the past year. The fact remains that for a house builder like Persimmon most of their cost base (in the shape of their land bank) is baked in for the next three or four years, what they paid for that land is what they paid, they can't change it. Given that house builder's margins are typically in the range of 18-22% it means a house price fall of just 5% would wipe out about a quarter of their profits and lead to a certain cut in the dividend. The view of the market, even after today's increase, is that a fall in house prices, and a commensurate cut in dividends, is far more likely than not.

For what it's worth I agree, I rode the Persimmon gravy train from about 2009 or 2010, but once S24 looked like it was for real I bailed out. And even the carrot of a 6% plus dividend wouldn't lure me back now because I think it's extremely likely that 6% will soon become 2% or 3%.

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Basically Gove has sabotaged the leave campaign. He was very unpopular and unelectable. His back stabbing of BJ effectively put up Leadsom, who either wasnt up for the task in hand or maybe even not intending to run anyway.

The whole thing stinks of a stitch up.

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Alternatively, the Canadian dummy's already promised the Primary Dealers a rate cut and another round of QE on Thursday.

In turn, the Dealers have front run the information to their biggest customers, the pension funds and hedgetarians.

Uninvited to the party but sensing a change in the prevailing wind, the momo jockeys and day traders have bought into it too.

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