Back when the Brexit vote was happening I wrote here that Brexit would never happen.
I was pretty much a lone voice in saying this. Most assumed the voice of the people would not be ignored?
To me it was simple, the referendum was an ‘advisory’ referendum aimed at advising parliament. It wasn’t, unlike the recent Scottish independence referendum ‘compulsory.’ As such the parliamentary representatives could have just said, “thanks for the advice, we don’t agree, forget it.”
As such with only about 25% of the MP’s in Westminster for a Brexit, in my mind Brexit would be killed at birth. There would be no article 50 invoked to start the Brexit process.
Much to my surprise it was.
The bottom line was that no representative or party felt safe to reject the Brexiters directly. Slapping 50% of the electorate in the face was seen by most as a suicidal political move, so even if Brexit was against their political principles, few were going to fight against Brexit head on.
So here we are today, most of the British parliament desperate to kill Brexit but with no scapegoat to blame the treachery on, snookered for a way to stop it.
Now time is running out.
At this point it looks like Parliament will end up with a ‘fait accompli’ of having a choice of the current faintly nightmarish agreed deal or the utterly catastrophic ‘no deal Brexit.’
These are the obvious two outcomes ahead.
The third way might be a new referendum, which is being pushed hard by some ‘Remainers.’ This worked in various European countries when a referendum vote disagreed with the governments desired outcome. A second referendum could be slipped in. Yet it still risks a subsequent Brexit voters revolt at the next election wreking havoc. That could be disastrous for which ever party caught the blame and especially dangerous for the Labour opposition party if it were seen to force this outcome. It also risks a second poitive ‘leave’ vote potentially forcing a hard economically crippling ‘nodeal Brexit’ outcome.
As such no one has grown some, to force the second referendum option, so the UK is barrelling towards Brexit on a tails you lose, heads I win pre-pack deal dictated by the EU.
This could be the point where I moan about what an awful mess a Brexit is going to be, but what I care about is how to make money from this situation.
The big bet and it is a risky one, has to be on a ‘No-Brexit’ outcome. I can’t imagine this happening but my gut tells me something is going to suddenly rear up and kill Brexit. Every part of the governmental system wants ‘remain’ and it seems impossible that it wont get its way. I can’t see how, but it seems impossible that power won’t find a way.
A ‘no-brexit’ would undoubtably spike the market up a long way, so if you think the stock market wont continue to crash before the March Brexit date, then it makes sense to have a pile of FTSE 100 tracker ETF, waiting for the last minute midnight knock on the door for Brexit.
Personally, my bet is on another leg of the global stock market crash that will bring the FTSE down to between 6000 and 5500, followed by a great opportunity to buy into value. I have about 25% on my usual UK exposure parked in a few conviction stocks. As such I just have a little exposure to the possibility of a ‘no Brexit’ outcome.
Now for the disaster minded you can always imagine a full-on US market crash coupled with a no-deal hard Brexit and look to 4000. Its hard to imagine this future but it was also hard to imagine that nearly 20 years ago the UK market was at today’s levels, while the US market managed to nearly treble since then.
This pathetic performance is not down to Europe as the German DAX has performed in line with the US markets. It is down to something else. The French market has performed just like the UK market, they trade over the years like twins. This tell us that something similar is amiss in the economic governance of UK and in France and it is crippling both countries.
Consequentially it is easy to imagine France has their Gillet Jaunes and we have Brexitters have something in common and that the issues of their revolt are just pretexts pushed forwards by general anger at the state of affairs.
As last January was the beginning of a new era in the stock markets, so Brexit, the Gillet Jaune and the new Italian govenment marks a new era in Western politics. Say goodbye to the old politics of newspaper and TV and hello to the politics of the internet. This is the same phenomena that swept the Levant and it has now come ashore in the West.
Where this wave goes and it will be far, the ecomony and the markets will follow and it will be a wild, wild, ride.