, 12 tweets, 3 min read Read on Twitter
My honest opinion is that I have absolutely no clue what will happen on #Brexit in the newt 3 weeks. But I though you might be interested to know what investors believe, so here’s some data from a recent poll. (thread)
Let's start with the big question: Average probability of exit by end of October: 36%, Mode probability 25%. That's high!
What about no deal? Do investor view it likely?
Circa 20% believe it’s a 10%-20% proba event, 20% says a 20% to 30% proba and 20% say it’s a 40%-50% event. Average proba 42%. So yes, I'd say pretty likely. Not sure everyone is trading accordingly though.
Another obvious is how do we get out of the Groundhog day movie ? Large majority (60%) believes it's general election, the rest is almost equally split (ref or deal)
So if it's elections, what about the politics, then?
First: likely market impact of Johnson resigning; well no one has a clue.
If he goes, what's the expected outcome of general election: Clearly a hard Brexit win is favored scenario with a win from Tory or Brexit + Tory as clear favorites (55% combined), the rest is equally split between Labour led coalition or LibDem led coalition
Logically this translates into the following views: for the ultimate endgame, No Deal is most likely (27%), then Soft Brexit (24%), Perpetual extension (20%), Deal (18%) and surprisingly very low remain proba (10%)
A side effect but still hugely important: the average proba of breakup of UK in case of no deal is viewed as 44% (WOW !!!!) But this is the result of very different views, lots of 0% and 100% there !!
And maybe the most incredible one for the end: 45% are more worried about Corbyn than no deal, 20% neutral.
Useful caveat, investors are not that good at predicting political event. Not that bad either, ofc, but there is no magic. However, it gives you an indication of what they think and what could happen on markets if things turn vastly different.
& have a nice weekend!
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