When elephants fight, the grass roots suffer. It is as true in Africa, as it is for political parties in the U.K. Disputes must be over quickly. Leader selection is an unseemly process. Much is to be done, to deal with life post Brexit. Jeremy Corbyn is confined to some ivory tower in Westminster. Rapunzel without the hair, rescue awaited from grass root activists. Elected labour MPs have mounted a silent coup. The tree has fallen in the forest. No one appears to have heard. No one appears to know what to do next in the red tent ... In the blue camp, Boris Johnson will not be Prime Minister. Gove has delivered the stilleto's kiss. Not fit for purpose, the damning claim. Michael Gove makes out his case - "I never thought I’d ever be in this position. I did not want it". Sounding more like Evita Peron, "I had to let it happen, I had to change", Gove confessed "Whatever charisma is, I don't have it." Not to worry, there is a man with guile and cunning in spades, to offset any charm deficit. Theresa May is the bookies favourite. Taking the stance of a headmistress at the start of a new term. "No more fighting in the playground. We are leaving the EU." Anthea Leadsom is making an early run. "The next leader of the party must be a "Brexiteer". Ouch. Gove is a goner. Conservatives love assassination, they just don't like the blood it makes. Nor do they love the bloodied hand that bears the knife. Even though it was plunged into Boris Johnson. So what happens next ... Markets bounced. The FTSE closed up 400 points near 6,600. Sterling fell against the dollar and the Euro. Gilt yields slumped below 1%. How the gods of Planet ZIRP scoff mere mortals as we continue to misprice capital. The Governor of the Bank of England made a "no need to panic" speech. Now we know how policy is formulated. Above the central arch, there is a weather vane. Originally installed in 1805, it has played a central part in monetary policy. When the wind blew from the East, ships would travel up the Thames. Merchants would need finance to purchase the cargo. When it blew from the West, credit would need to be withdrawn, the boats were not coming in! Forward guidance and a demand for money function determined by which way the wind is blowing. The Governor is convinced the wind is blowing in the wrong direction. Economic conditions have deteriorated. Some monetary easing will be required over the Summer. More QE and a rate cut! Surely not. Inflation is set to accelerate into the second half of the year. Oil and commodity prices are rising. Sterling weakness will exacerbate domestic inflation. Lest we forget the yawning current account deficit. 7% of GDP in the first quarter of the year. Time to stay the hand of monetary policy .... There will be time soon enough to act.. And what of fiscal policy ... Give us the money or the cow gets it! The Chancellor has accepted, enough of fixing the roof. Time to accept the inevitable. We no longer plan to achieve a budget surplus by the end of parliament. Enough of fixing the roof whilst the sun is shining. Time to bring in the roofers before the storm begins. Theresa May has made the call. An end to austerity. So what really happens now? Well not much. The new Prime Minister will be installed in September. A working party will determine the "new deal" to negotiate with the EU. Article 50 may be triggered before the end of the year. Or may be not. It will then take up to two years to determine the exit process and much longer to determine the new trade deal. It could be five years before the changes begin to hit the UK in a big way. Lots of time to condition the electorate to a deal which will offer free trade at the price of a weekly subscription and free movement of labour. What can be done ...? Cut immigration? Re classify students and those in pursuit of further education. Slash the numbers with one strike of the pen. Guarantees must be offered to farming, universities, big pharma and the regions. No money to be lost over the next five years and beyond as a result of any loss of EU deal. Status Quo Ante Referendum the guideline. Greater commitment to schools, education and the health service to follow. The people have spoken ... and they have had enough for now. So what happened to Markets ...? Sterling fell against the Dollar to $1.326 from $1.375 and down against the Euro at €1.191 from €1.230. The Euro fell against the Dollar to 1.113 from 1.117. Oil Price Brent Crude closed at $50.15 from $48.70. The average price in July last year was $56.56. Markets, were up - The Dow closed up at 17,954 from 17,503. The FTSE closed at 6,577 from 6,138. Gilts - yields moved down. UK Ten year gilt yields closed at 0.86 from 1.09. US Treasury yields moved to 1.45 from 1.57. Gold closed at $1,335 from $1,316. John That's all for this week ... don't miss our what the papers review every morning @jkaonline. Don't miss our Masters of Strategy Series on Digital Disruption and the New Yahoo Case Study out now! Interested in Strategy? Join our Masters of Strategy on Digital Disruption... Don't miss our regular updates on Corporate Strategy in the Masters of Strategy Series. © 2016 John Ashcroft and Company, Economics, Strategy and Social Media, experience worth sharing. ______________________________________________________________________________________________________________ The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. 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