October 17, 2019
In the spirit of dealmaking, after the U.S. and China came to terms on a (limited) deal on trade last Friday, the UK and EU leaders came to a deal this morning on Brexit.
The deal will go to a vote in the House of Commons on Saturday. At the moment, the bookmakers in the UK are still showing a better chance that the deal won't be approved on Saturday, and rather the October 31 hard deadline will be extended. We will see.
If we look at the currency markets, as a gauge, the response is positive. Both the euro and the pound have been rising all month in anticipation of a deal, as we have been headed toward the impending October 31 deadline.
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Listening to the press conferences today, the tone of the UK/EU deal sounds much like the tone of the U.S./China deal — both sides (in both deals) capitulating to get it done and move on. It seems that all parties involved have come to the realization that not only is global economic sentiment eroding, it's beginning to show up in the data. And if left to evaporate, it would be very dangerous for the global economy. Perhaps that's why both Europe and the Chinese had the similar comments to make about the respective deals: China's Vice Premier said its about "peace and prosperity for the whole world." The President of the European Commission said today that the deal is about "people and peace."
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