Greetings from sunny London. Of course, it is actually raining as I am writing this column, but that is the cost of doing business in the U.K. in terms of the other costs of doing business in the U.K. Obviously all eyes are focused on the Brexit negotiations between Boris Johnson's government and the EU.
Boris declared Thursday that his government and the EU had struck a "good new deal," but I would caution investors to be very cautious when reacting to "news of the day" fragments of information that will move global markets. That said, those tiny fragments of gossamer are exactly what has moved the markets, including the U.S. market, countless times in the past 12 months on the U.S.-China trade issue, so why should Brexit's deal-or-no-deal be any different?
Being here hasn't given me any great knowledge of the zeitgeist, either. I think the general populace is in complete ignorance of the actions of the political class, seemingly the goal of that class since the days of Churchill. The Brexit referendum occurred on June 26, 2016, and I have yet to meet a single British citizen whose mind has changed - Leave or Remain - since that day. It is now a matter of whether Boris Johnson can get a deal through a fractious Parliament and his own fragile coalition, which includes an incredibly important minor party, the Democratic Unionist Party of Northern Ireland.
The one common theme, among my friends, anyway, is an abject fear of a government led by Labour's Jeremy Corbyn. Corbyn makes our Bernie Sanders look like Ronald Reagan, and his extreme left-wing rhetoric and failure to root out the anti-Semitism in his own party would seem to give Boris a get-out-of -jail-free card. Like our 45th President, however, Boris does have his rough edges, but when the public is scared to death of one's opponent, it does tend to strengthen one's hand.
So, the cards are in Boris' favor, but again, I am not going to attempt to predict the resolution of Saturday's crucial Brexit vote in Parliament. If your crystal ball is clearer than mine, though, and you fancy a punt, as they would say over here, here are three ways to trade the Brexit vote ahead of the weekend.
(FXB) . This is Invesco's CurrencyShares ETF based on the USD-GBP exchange rate. FXB has jumped 5% in the past week on hopes of a resolution, but those are speculative plays. It is not speculation, though, to say that a failure by Parliament to back BoJo's good new deal would be harmful to the value of the pound and a successful vote for the Tories would cause the value of the pound to rise.
(TLT) . iShares' 20+ Year U.S. Treasury ETF. U.S. Treasuries will always be viewed as a safe haven, and any sort of delay or disagreement on Brexit will drive demand for USTs.
(GLD) . If hopes for an orderly Brexit implode, the SPDR Gold Trust ETF will no doubt jump. If not, I think gold has been overbought for the last three months and could easily pull back below $1,400 an ounce.
So, those are the means to play Brexit. I will let you choose your side, but remember these moves are likely to be swift. So, please, as the announcements note on the London Underground, 'Mind the Gap'.