Brexit, Europe and the US.
The UK has less than two weeks left before itbwill hav to leave the European Union. It is possible that in that time cracks will be papered over, cans will be kicked down roads and water will flow under bridges. But it is hard now to see anything other than a long drawn out decline for Britian at best. Sterling will lose value, London will lose its credibility, there will be virulent changes in government, there may be a coalition.
Already Europe is at risk. The nations there are being tested, especially the new ones to the South and East. They are living off the false air of bad debt. Their banks are vulnerable, undercapitalised, overextended, and in some major cases trading illegally. Most are revising down their 2019 performance. Poverty, unemployment, the threat of immigrants is encouraging extremist politicians. In all this Britain looks like an exhausted member deserting the sinking ship just when it should be helping. Leadersless it is wagering its own economic future to pander to a luddite, and isolationist section of its pubic.
In the midst of all this, the US remains relatively robust. It is self sufficient.
Here’s what will happen. Expect Brexit to armwrestle itself into a strangle hold within the next two months and certainly before the EU elections in May. Expect then a bitter fragmentation of political thinking within Britain and each member State, expect extremist and populist posturing. Expect the ECB to use every tool it can to keep the failing experiment of the EU alive. Look for the collapse of banks, for deteriorating State performance. Greece, Italy, Spain are at risk, as are the Eastern Nations – all are threatened by the start of the next immigration season. Sell the UK and sell Europe.
So expect too that monies will move from these beleaguered nations to the only safe haven left – to the US. It is entirely feasible that we will see a stock market surge throughout 2019 – stay fully invested in US stocks that trade within the country, and have low PE’s and solid dividends.
Next week we will outline the challenges ahead for the US, in particular for its Trade and Foreign policies.
Have a good day. James