Brexit

Everyone knows what everyone else "says" they will do. But what will they really do, if pushed? There is an excellent discussion of Brexit game theory by Eurointelligence and Peter Foster in a set of articles on the Daily Telegraph. Boris Johnson: "Do or Die". He will deliver Brexit on October 31. No delays. No extensions. He does not want No Deal but he is prepared for one. EU: They will not under any circumstances reopen the deal they made with Theresa May. In the event of No Deal, they will not negotiate trade agreements unless the UK honors the backstop, helps Ireland, and agrees to pay the Brexit fee.

Global economic growth continued to suffer in the first half of 2019 due to the trade dispute and the uncertainty surrounding Brexit. By contrast, the prices of economically sensitive assets such as stocks or high yield bonds have performed quite well so far in 2019. This divergence is primarily attributable to the shift in Fed and ECB communication over recent months. The trade war between the US and China remains the most important factor for the economic outlook. As both sides are under pressure, we expect a rapprochement in the second half of this year.