Investment Talks: Brexit Muddles Through the Approaching Parliamentary Vote
Monday 26 November 2018
After the EU approval of the Brexit deal, we could pass through some tough time until the UK parliamentary vote on the Brexit Withdrawal Agreement in December. UK Parliamentary ratification of the deal will be very difficult and will likely bring new episodes of market stress. But we think the most likely scenario is that the deal will ultimately be ratified, and the UK economy should experience a slight acceleration in 2019 and 2020.
The robust performance of the US economy in 2018 has led to the supremacy of US risk assets compared to the rest of the world. Moving towards the end of the year and into 2019, global investors have started to raise questions about whether the US economy and business sector will continue to shine, how inflation will evolve, and which direction the Federal Reserve will take going forward. Read here
In the upcoming US midterm elections on November 6, there are high expectations of divided Congress, with the Democratic Party taking control of the House of Representatives and the Republicans – or Grand Old Party (GOP) retaining control of the Senate. Other scenarios are possible: the GOP could maintain control of Congress or the Democrats could sweep both the House and the Senate.In this piece, we examine some of the reasons why we believe the most likely election outcome is a divided Congress. We then look at the economic agendas for both parties and potential issues around their implementation. Finally, we analyze possible investment implications on US equities and fixed income markets. Read here