No Deal Dilemma
Boris Johnson's playbook has always been to concede little and take negotiations to the absolute limit so it should be no surprise that we're here. At the same time, if he's bluffing that a no-deal Brexit is now a 'strong possibility', then he's pulling off an incredible bluff.
Sterling continues to hold at strong levels, suggesting that the bulls haven't panicked yet. The corollary is that the upside risk/reward for betting on a deal is limited. Ashraf mentioned the possibilities for scalping/daytrading GBPUSD for WhatsApp Broadcast Members.
What's particularly worrisome is that there are so few positive murmurs from negotiations, nor are there any ideas floating around about how to solve the particularly-difficult level playing field provisions.
Add it up and the odds of a bad outcome are rising.
On the vaccine front, the US cleared a final regulatory hurdle for approving the Pfizer vaccine on Thursday and will almost-surely approve it on Friday. That may inspire a relief rally but we're watching the news from Sanofi and GlaxoSmithKline who delayed their vaccine program after it triggered a low immune response in the elderly. The product now won't be available until the end of next year at best.
Every vaccine matters because the enormous challenge of vaccinating the entire world. While the UK and US will be at the front of the line even with the current vaccines, the a faltering in other candidates stretches the timeline for the developing world, and ultimately curbs global growth.
In this case, the market may forgive one setback but two or three repeats would trigger a wave of risk aversion.
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