Whatever Happened to Brexit?
Three months ago, Britain’s exit from the European Union was set in stone with a laser show outside Downing Street. Investors have been consumed with the most devastating economic crisis in years since then, but final-mile Brexit negotiations will stop for nothing.
From home, diplomats are working round the clock to agree on a free trade deal. If coronavirus impedes progress, Wall Street might have to wait three years before knowing the fate of small, Anglo-European stocks. That’s an optional delay that Boris Johnson can trigger himself. He doesn’t want to, of course. He’s set the mandate; “get Brexit done,” and he’s willing to declare us “out!” as soon as June if those Zoom meetings from London to Brussels go nowhere.
That would mean a cliff-edge no-deal, but small businesses are already on their last legs. The coronavirus hit the micro-cap dominated FTSE All-Share index very hard in Britain, and the Europeans are also teetering on recession. The uncertainty of no-deal would, in the short-term, hammer confidence again. That’s why some are arguing for a delay to BoJo’s decision to delay, which faces a delay until the coronavirus is beaten. This won’t irk the people!
Wall Street analysts have notoriously short attention spans, but the Invstr community must ask, “what next?” to trade a step ahead. Indexes like the CBOE Brexit High 50, and CBOE Brexit Low 50, may be worth tracking.
They each comprise 50 UK businesses making proportionately the most and least money domestically, respectively. In the face of the coronavirus giving officials pause on Brexit breakthroughs, stocks on the Low 50 have begun a slightly steeper recovery than stocks on the High 50. A sign of stronger moves to come?