UK Prime Minister Theresa May is heading back to Brussels for what we see as a way to collect air-miles. There is zero evidence that anything has changed on either side of Brexit: concessions from the EU are highly unlikely. As Brexit nears, UK manufacturers are stockpiling supplies and slowing production in expectations of cuts in orders. While politicians and investors seem oblivious to the risks of Brexit, main street is fully aware. We see rallies in GBP as opportunity to reload shorts.
Otherwise, markets are feeling sunny. US tariffs on Chinese imports are anticipated not to increase from 10% to 25% in March. The general risk-on environment in equities, commodities and currencies is driven by less-discouraging Chinese economic data and optimistic reports for this week’s round of US-China trade negotiations.
By Peter Rosenstreich
