Eq: Dev ex-US
Scotland and the UK have been at odds for centuries, embedded in a tenuous alliance for the last three hundred years. Two years ago, Scottish nationalists failed by a narrow margin to leave the UK, but now the leader of that party is trying to secure a second Scottish referendum following the UK’s vote to leave the EU. The leader of the SNP, Nicola Sturgeon, wants a vote once the details of the Brexit negotiations are decided but before the UK actually leaves the EU. “What Scotland deserves is the chance to decide our future in a fair, free and democratic way and a time when we are equipped with the facts we need”, says Sturgeon.
FINSUM: Technically the government in London would need to approve this referendum, but we expect Scotland will end up undertaking a vote either way.
Source: Wall Street Journal
The Brexit soap opera continues in Europe, but an important story within it is Scotland. The country voted strongly to remain in the EU, a direct contrast to its southern neighbor. And while it has been lobbying with London to give it special powers to stay part of the EU single market, the English have reportedly not been listening. Now, Scotland’s chief political leader Nicola Sturgeon is weighing the possible date for a new referendum on UK membership, and she says Autumn 2018 looks like a good choice. The country has not definitively chosen to hold a second referendum, but says it may if the British don’t account for its demands.
FINSUM: The English better be careful or they are going to end up very lonely and isolated, losing Scotland at the same time as Europe.
Source: Financial Times
We have stayed away from covering too much of the in-fighting currently going on in Britain over Brexit and how to proceed in negotiating with the EU. However, something potentially very troubling came out this weekend that could weigh on global markets—there may be another Scottish referendum in the near future. Scotland has been furious over Britain wanting to leave the EU (Scotland is heavily pro-EU), and it has complained that London has not listened to its questions and concerns about Brexit. Therefore, the country is mulling over planning a new referendum on UK membership, and UK PM May has reportedly said it was okay so long as it occurred after the UK leaves the EU.
FINSUM: British political logic is confounding to outsiders, so it is hard to say how this may play out. However, we suspect Scotland will not want to wait until after the UK leaves the EU to have its referendum.
Keen Europe watchers will remember that a few months ago the UK’s Supreme Court ruled that parliament would need to vote to trigger a Brexit from the EU. However, the most important ruling—the government’s appeal of the decision—was announced today, with the Supreme Court upholding the decision (8 to 3) that parliament must vote before Brexit can be started. Ironically, the vote made the Pound fall, as traders view it as no impediment to Brexit as parliament seems likely to vote in favor of it. The important part of the ruling was that the Court said Northern Irish and Scottish legislatures will not have a chance to vote on the measure, which clears PM May’s timeframe.
FINSUM: Brexit appears as though it will likely be triggered in March.
For those of you who might not have noticed—and one could easily be forgiven for it—Britain’s largest stock index, the FTSE 100, is about to mark its best run in 33 years. It is poised to gain 11 days in a row. On the surface this seems like a headscratcher considering all the bad news and gloom surrounding the country’s Brexit from the EU. However, stock investors there love the devaluation of Sterling, which boosts earnings and makes British goods more affordable for overseas buyers. Take AstraZeneca for instance, the company’s largest drug maker, which has seen its shares rise in 16 of the last 20 sessions.
FINSUM: This shows that a currency fall can overcome almost any obstacle in the minds of stock investors.
Source: Financial Times
In a stunningly lopsided result given pre-referendum polls, Italians voted resoundingly yesterday to reject the constitutional reforms put forth by Matteo Renzi. The vote went nearly 60% against the reforms, and subsequently Renzi has resigned from power. Markets, curiously, did not react strongly to the result, with the Euro initially dropping but then rising. The explanation for the muted response is that traders finally saw this populist event coming, with one commentator saying “After Brexit, it took three days for markets to shake it off, with Trump it took three hours, with Italy it took three minutes”.
FINSUM: Italian banks got hurt pretty bad, but outside of that things have been okay. The big question now is what happens next in Italy. Will we see that far right party grab power and call a referendum on the Euro?