Brexit begins as Trump rally stalls
Predictably, the Trump-fuelled rally in stocks and the dollar faltered yesterday, as observers questioned whether Mr. Trump was the ‘closer’ and ‘deal maker’ he claimed to be on the campaign trail. As America grapples with its recent political decisions, the UK and the EU are preparing to grapple with political decisions of their own. Tomorrow, British Prime Minister Theresa May will formally invoke article 50 of the EU treaty, kicking off Brexit negotiations.
Mr. Trump lost a hard-negotiated deal over the repeal of Obamacare last week, as Republicans refused to give him unanimous support on Friday’s vote. Throughout the course of his Presidential campaign, Trump frequently touted the speed and ease with which he would repeal the previous President’s healthcare bill. His inability to deliver on this promise has led some to question whether or not he is the ‘closer’ he claims to be. If he’s not, will the dreams of financial deregulation and tax reform that are currently fuelling market optimism ever come to fruition?
Michael Hewson, chief market analyst at CMC Markets, thinks not. He wrote yesterday:
“The consensus on (the tax reform) is probably likely to be much more difficult to achieve than on health care, which suggests that a lot of the optimism about the reflation and fiscal stimulus trade may well have to be reassessed as well.”
Meanwhile, across the pond, the UK is about to make good on its promise to leave the EU. In a move that has set Scotland against England, Theresa May will invoke article 50 of the EU treaty tomorrow – and thereby initiate the Brexit process. What will follow is (allegedly) two years of negotiations that will see Britain’s desire to maintain its strong global trade positions, and relative economic clout, pitted against the EU’s requirement that member states, if they choose to leave the Union, should not be seen as profiting from doing so.
The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.
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