Market drift, Brexit drift….
I have maintained since day 1 that Brexit will be killed and will not happen. This is a position based on the fact that 60-70% of the UK MPs, its elected representatives are anti-Brexit and so are the government institutions themselves. As such the Brexit will not pass and will be got rid of.
Initially I though the government would simply not invoke article 50, but that turns out to be to easy or rather too difficult. The political calculation is’ someone else has to take the blame for killing Brexit.’
Who ever takes the blame will lose their chance at winning the next election as their Brexit supports will desert them. That would be the Tories or Labour. Which ever takes the blame loses, so politicians are trying to kill Brexit and pass the blame for it on to someone else.
That’s a tricky game.
This is not happening in a vacuum because the EU could dictate. They might want shot of the UK so they can Federate quickly or that might want to keep the UK in to stop that dream. Who knows. What we do now know is they want to keep the UK in because at the last deadline they could have delivered an ultimatum which would have kicked the UK out or made in grovel to stay in. Instead they gave the UK more can kicking space.
So the EU want Brexit dead too.
So in my mind Brexit is very unlikely now, and that will be great for the stock market. Some think a Brexit will be good to because the uncertainty is worse than a Brexit. I think this is optimistic but not impossible. The market should have priced the possibilities in by now but there is always room for a surprise in politics because nothing wreaks chaos like politics.
However there is another clear indicator that Brexit is dead because there is a chance for the country to tell the government what they want in a clear advisory way.
It is the Euro elections.
All the main parties need to do is say, “OK folks vote in the EU elections as if it’s a referendum” The liberals want to stay, we want to leave. Vote for them if you want to remain and vote for the Brexit party, Us or those other folks if you want to leave.”
The EU elections may as well be a referendum.
Its not being treated as such because the vote might go “leave” and then what will they do?
It will likely go “leave” but at least they will be able to say, the vote meant nothing.
It must be said that politic is often unfathomable, but if there is a Brexit, it wont mean much, so that will be good for the market. If its killed properly that will be strong for the market. The only way there will be a nuclear hard Brexit is if the EU decide they’ve had enough and that is unlikely as it seems the UK is needed to take the blame for blocking EU Federation which many EU countries don’t want.
So don’t expect any clear cut decisive moves, just more rounds of farce, where politicians squabble to have it their way and escape the blame.
The market will drift.