Good morning.

The British Pound dropped to its lowest level since 1985 this morning, on fears that the U.K. has opted to leave the EU’s single market as part of its Brexit process. That threatens to be more disruptive to its trade with the EU than some of the ‘Brexit Lite’ options that were theoretically on the table. Prime Minister Theresa May said on Sunday she would start formal exit talks by March next year.

The currency hasn’t been helped by comments from Chancellor Phillip Hammond that the U.K. economy is headed for a “roller coaster ride” as the country enters what is necessarily a confrontational negotiation process in which the U.K. appears to have the weaker hand.

The stock market is less bothered though. The FTSE 100 has hit 7,000 for the first time in a year. Admittedly, that’s largely because international companies whose shares trade in the U.K. tend to benefit from a lower pound, since their profits are earned outside the country, especially index heavyweights in the commodities sector such as Royal Dutch Shell and Glencore. The FTSE 250, which includes more domestically-focused companies, has hit an all-time high (even if it’s still lower than before the referendum in dollar terms). Confused yet?

Meanwhile, the backlash against globalization will be topic A at this week’s meetings of the IMF and World Bank in Washington. Rich Miller at Bloomberg writes of the “existential threat” to the global order.

Best quote from Miller’s story: “I’m characterizing the global economy as something akin to a driverless car stuck in the slow lane,” says David Stockton, former Fed official and chief economist at LH Meyer Inc. “Everybody feels like they are being taken for a ride but they’re pretty nervous because they can’t see anybody in control.”

More below.

Alan Murray

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