European markets and US futures are under the influence of poor Chinese economic data. It wasn’t a long ago when the markets felt the pain of feeble Chinese import and export numbers. Today’s drop in the Chinese industrial number confirmed the weakness in the Chinese economy is for real. This all comes in the midst of Brexit chaos.
The nuclear option is off the table, the MPs in the U.K. voted unanimously what they do not want this option- leave the EU without any deal. As we said last night that from Sterling’s price perspective, it is comforting to know that a no-deal Brexit scenario is off the table, but at the same time there is no table.
Unfortunately, there is no end to this chaos, this is because there is more disarray in the Prime minister’s team now. With the country in limbo and politicians in their own deadlock, there is less clarity as to where Brexit will head from here.
For now, the lawmakers are set to vote again in the parliament and they will have to choose between the May’s deal (failed twice already), perhaps the prime minister doesn’t understand the meaning of humiliating defeat, and delay Brexit.
As we said yesterday, that the MPs in the U.K. voting against the no-deal Brexit doesn’t change the law by default in the U.K., the EU needs to agree with this as well. The EU is well within their right to say that they will not allow a no-deal Brexit off the table. They would require a compelling reason, and a well thought out plan for Brexit before they agree with the possibility of delaying Brexit.
Regrettably, the policymakers over in the U.K. have Theresa May who is not only stubborn but cannot think of anything else except keep putting her deal in front of the Parliament. How many sequels can you really make out of the film which was a total disaster in the first instance?
Nonetheless, at 19:00 London time, the MPs will be forced to vote again. The public resources are already scarce, and getting the MPs to keep on voting on the same issue is like running a circus at the public expense. Looking at the British Pound’s price, it is highly likely Brexit will be delayed today.
The question is how long the delay will be? Clearly, May doesn’t want Brexit to run into the EU election. For her, it needs to be before June. Investors are not sure if politicians can finalize this deal before that. They have achieved nothing in nearly 3 years now. Nevertheless, the clock is ticking and Brexit exit day is approaching fast.
Theresa May has said that she is going to ask the EU for a technical extension if a deal can be agreed in the next seven days. Failing to have any deal by March 20 would lead to a much longer delay in Brexit or perhaps, no Brexit at all. Of course, by wording things in this manner, the prime minister is trying to gain support for her deal. Especially, from her own party members who have voted against it. However, after yesterday’s devastating defeat she may struggle to pull anyone to stand behind her.
