More room for Santa?

So much for Brexit staying out of the news after the postponing of the vote. To be fair the last 24 hours has been more about the survival of Theresa May, what does not kill you can make you stronger, comes to mind. The EU must have been as nervous for the outcome yesterday as Theresa May herself. If the confidence vote had gone against her, the Brexit deal she had negotiated would have in all likelihood been consigned to the bin. That would have left two options, one apparently revoking of Article 50, hard to imagine, the other more likely the inevitable of hard Brexit. Either of those outcomes was not particularly palatable.

The pound rallied against the US dollar on Wednesday, the stock market rose, on the expectation, she was likely to win. Theresa May is now faced with trying to find a way to secure concessions from Europe, as they declared no new negotiation; the deal is the deal. Then somehow find a way to get a vote of support from parliament. Ultimately, she will get something from the EU and somehow the deal will get done and passed through.

Equity markets have had something of a recovery so far this week, possibly helped by the US yield curve not inverting any further. Brexit has undoubtedly played its part in unsettling confidence in global markets.

The Vix fell again tonight, however, remains above 20. We are coming ever closer to the holiday season. No news may be good news in the coming days. Global equities are down over 7% year to date. That seems harsh, there may be a bit more room for the Santa rally yet.

Posted on December 13, 2018 .