The collapse in the long odds on a Brexit to near even money is amazing.
I’m neither for or against the Brexit but that ‘leave’ momentum looks set to make the referendum an upset. That would be a massive outcome and the market will stumble. A ‘leave’ vote will whack the market hard. As such it will be a good time to buy. I will swap out of my defensives and buy good companies hit hard by the vote.
However there is one thing to look out for and that is a refusal, most likely unspoken, to pass the Brexit agenda. If that happens then we should all watch out for the outbreak of big trouble. This is no Dutch referendum, this is far more significant. If a Brexit vote is frustrated or seen to be frustrated by parliament then we need to listen out for the ‘song of angry men.’ That uproar could really hit the FTSE.
What should happen on a leave vote if for Cameron to step down and for Johnson and/or Gove to take the country through the Exit process. If Cameron stays it will mean a blocking agenda will be played out and that could go horribly awry.
Anyone wishing for an easy life should vote ‘Stay’ but it looks like the UK could be voting for ‘liberty or death.’ How very fascinating.
The bookie odds against the Brexit have collapsed. From 2/1 against yesterday, they are now nearly even money. That’s a move from a 33% chance of a ‘leave Europe’ result to 50%.
Its long been a question as to why the bookmakers odds for the Brexit have been so wildly divergent to the polls and the markets. It turns out the effect on the stock market and the British pound of such long odds is a result of the chances of a leave vote when coupled with what the market considers would be the economic ramifications of such a move.
Even a slim chance of a Brexit is enough to mark down the FTSE and the Pound 10%.
… and now there appears to be a big swing to the Brexit leave camp, as the bloody minded British are stirred up at the sight of the elite trying to scare them into staying in the EU. It doesn’t help that Putin’s agent provocateurs are attacking British football fans in France, but compared to the sight of all spectrums of the British elite hugging each other for the sake of remaining in the EU, it is of little matter. The elite of the UK bullying and bluffing is awakening the ‘perfidious Albion’ streak in the British voter. Brits are famously contrarian.
Britain was the original geopolitical troll. The national emblem of the ‘V sign’ the insignia of a thick defiant streak that is being inflamed by the voters ‘lords and masters’ trying to press-gang the British voters into bowing to Westminster and Brussels.
As the 17th Century French Bishop Jacques-Benigne Boussuet lyrically waxed:
England, oh, treacherous England,
..and that passive aggressively appears to be welling fast now as the vote approaches. The drumbeat of the ‘Remain’ lobby’s ‘project fear’ is merely raising the shires in revolt against the EU.
Unless the polls are horribly wrong this ground swell will only build. The sight of the establishment squirming will only exacerbate the situation and ‘leave’ support. The litany of threats delivered by politicians to the voters' way of life has had the opposite effect on them than was planned. The dire consequences of leaving the United States of Europe which has been rammed down their throat by the media have instead defined the process as a sacrifice worth taking for British sovereignty.
So as the vote swings towards a ‘Leave’ win, so the stock market is slumping. Unless the polls turn, and why would they, the FTSE is in for a rough month.
Having broken the 6000 level, the lower the market goes the more the market is signalling the likelihood of a Brexit. Below 5500 the FTSE would be telling us the Brexit is going to happen.
The bookie odds are fast approaching a 50/50 chance of a Brexit, that’s up from a 25% chance mere days ago. That is a massive swing and one set firmly at the door of the TV debates which placed the personalities of British politics against the simple abstract cause of British Sovereignty and highlighted the disconnect many voters feel from their government and its elite institutions.
It is a mirror of the incredible rampage that Donald Trump has had, through the political infrastructure of the US.
Like a ‘Brexit’ it can only happen when voters are sick to death with the false promise of ‘Change.’ Now they want a dash of revolution and in the UK it suddenly looks like they will get it.
A 3/1 against bet becomes a 50/50. 3/1 against is the current odds of a Trump presidency. Could the Brexit story be repeated in the coming Presidential election?
As the inconceivable starts to look like a strong possibility in the UK, the same could happen in the US in November. If the Brexit happens next week, the effect on the market will be a simulation of what would happen in the US if the presumptive Republican nominee won in November. The long term outcomes are unknowable, but its fair to speculate the short term volatility in either case will be immense.