Britain voted to leave the European Union in 2016. Ten years later, Britain might vote to rejoin the European Union. This is what passes for policy in a country that conquered half the world and now can't decide which side of a trade agreement to stand on.
The "Brexit reversal" discussion exists because the original Brexit didn't deliver the economic paradise promised by people who looked like they'd been fired from a Dickens novel for overacting. Shocking stuff. Turns out leaving your largest trading partner creates friction in trade. Who could have predicted this besides every economist, every business leader, and every person who passed eighth grade social studies.
Retail traders are currently trying to price in the possibility of a reversal by buying British pound futures and typing "Brexit reversal stocks" into Google. They will lose money either way. If Britain rejoins, they'll chase the rally three weeks late. If Britain doesn't rejoin, they'll hold their positions anyway because they "believe in the thesis" which is trader speak for "I'm too stubborn to admit I f*cked up."
The chart shows ten years of political noise that means absolutely nothing for your portfolio. Draw a trendline on the pound. It goes up sometimes. It goes down other times. Technical analysis says the 50-day moving average crossed the 200-day moving average, which means the chart is still a chart.
Here's what's actually at stake: nothing you can trade. Political reversals take years to negotiate, longer to implement, and even longer to show up in data that isn't already priced in by algorithms that react faster than you can spell referendum.
Britain spent a decade leaving Europe and might spend another decade coming back, which is the most expensive hokey-pokey in human history.
Leave a Comment