Deal or No Deal?

As Noel Edmunds might have said, before his whole life was taken up suing Lloyds Banking Group (quite rightly in my view).

Readers will have noticed big jumps in stock markets and Sterling when the news broke that a possible Brexit deal is back on the cards.

This many strike you as odd, in that markets have not sold off that much relative to where they were when Mrs May was trying to get a deal through and I read the news as saying Boris will present something very similar to what was on offer previously but if course as a triumph. As one wittier commentator put it, the threat of No Deal, ‘do or die’ gave the UK the extra clout to make the concessions required.

The markets are certainly right to think that for investors Brexit with a deal is a better option than leaving without. But what this jump shows is that any sort of good news is now seen as wonderful, not that really great prospects await the UK economy in the immediate future. We may simply spend a year heading towards another cliff edge – the end of the transition period.

However, if markets go up, we as investors are bound to be happy. Unless you are really confident in placing trades and are confident enough to buy Exchange Traded Funds (ETFs), then the ‘forward pricing’ of OEICS means that you can’t really buy into such a rapid intra day price jump because the higher price will be what you buy at, after the jump has been priced in.

In fact as relief rallies are at risk of collapsing like an unlucky participant’s soufflé in a TV cooking contest, attempting to time the market on one day’s news is not recommended!