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  • Cornerstone Team

The United Kingdom of Devil's Island

The longer the marriage, the more complex and lengthy the divorce, and the more likely it is to be detrimental to all of the polygamous sides. 

Britain face's a prisoner’s dilemma," says Nick Rees, managing partner of pension fund consultant, Absolute Return Partners. 

"The more financial markets throw up over the next few months, the more likely lawmakers on both sides are to forget past disagreements and insults, and work on a solution that would keep the UK in the EU. 

"On the other hand, if financial markets get a whiff of something about to happen - a possible compromise solution – financial markets will perform better, and thus make it less likely to happen." 

It's hard to refute that. Foreign Exchange markets, equities and commodities all puked the first couple of days after the referendum but, more recently, the atmosphere has been somewhat more upbeat - at least in equities and commodities.  The picture painted by many in the market is remarkably consistent. Investors have not suddenly turned gung-ho on Brexit.  A substantial part of post-Brexit buying is short covering.

Whatever view you hold, it is clear that negotiations to the exit will require a little more than a no, but yeah, but no, approach. 

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