Cool Video: Brexit–Now What?

by
Marc Chandler
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Marc Chandler, Wilf Frost, and Sara Eisen on the CNBC - Click to enlarge

I joined Wilf Frost, and Sara Eisen on the CNBC set at the NYSE shortly after the House of Commons delivered an unprecedented defeat to UK Prime Minister May. Catherine Mann (Citi) and Christopher Smart (Barings). The guests generally agreed that a delay in Brexit was likely.

Here is a distillation of my thoughts. Not all made into the video clip (that can be seen here)

1. Sterling was near 7-week highs as the market began pricing in a delay. This was evident in the events market (PredictIt.org) and the derivatives market.

2. The vote was largely as the BBC and the Financial Times predicted. Historic.

3. The short-term specs moved to the sideline ahead of the vote and moved back in when there was no surprise. My call for $1.30 looks more reasonable at dinner than it did at lunchtime.

4. May is likely to survive the vote of confidence tomorrow and attempt to cobble together a broader coalition.

5. A later and softer Brexit seems more likely than a no-deal Brexit, a second referendum, or no exit. However, if May loses the vote of confidence, all bets are off. Corbyn the leader of the Labour Party does for May what Agnew did for Nixon and Quayle did Bush-the-elder—the alternative is dramatically and recognizably judged to be worse.

About Marc Chandler

He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

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