Wednesday, September 25, 2019

Confluence Of Events Building Ahead Of October 31

A Confluence Of Events Are Building Ahead Of October 31st

With less than six weeks before the UK is due to leave the European Union, the geopolitical environment is growing increasingly unstable. Whilst this is not necessarily an indication that Brexit will happen on October 31st, there have recently been some interesting developments globally that merit closer examination. Let’s start with Brexit itself.


As it stands, a Halloween exit from the EU remains the default position. Prime Minister Boris Johnson has pledged that if he cannot agree a withdrawal deal with the EU at an upcoming summit on October 17th and 18th, he will not ask for a further extension to Article 50. This is in spite of a bill that passed through parliament in September that legally compels Johnson to go to the summit and request a minimum three month extension if a deal is not forthcoming.

If there is no agreement on a Brexit deal, and assuming Johnson keeps his word and leaves the summit without an extension, I would take this as an indication that the 31st exit date will hold. Parliament would not go quietly, however. One possibility is that right before the departure date MP’s try to force a vote on revoking Article 50 to stop a no deal exit.

This is potentially shaping up towards an eventual no deal mired in legal wrangling. But in the end the manner of such a departure will not matter. As the Article 50 text states, once the treaties binding the UK’s membership to the EU cease to apply, the UK is out. Any rulings made thereafter would not alter this fact.

Many consider Article 50 to be a mechanism designed to thwart Brexit from ever happening. But you could also reason that Article 50 works well from a globalist perspective. If elites want no deal to occur, then Article 50 is the ideal construct as through it they can control the timing of the point of exit and pull the UK out at their convenience.
Watching how Brexit is unfolding, it feels to me like the process is now reaching a crescendo. Perhaps this is why several key positions within the EU are about to change. EU Commission President Jean Claude Juncker is stepping down, as is European Central Bank President Mario Draghi. The date of their departure? October 31st. Christine Lagarde – a leading proponent of digital currencies – will take the reigns at the ECB from November 1st, the day when a new round of quantitative easing will begin to the tune of €20 billion a month. Is this all a mere coincidence?

The BOE’s next policy meeting coincides with their latest inflation report on November 7th. As I have detailed over the months, the economic ramifications of a no deal event would over the ensuing months almost certainly prove inflationary.
On the other hand, there is the possibility that Article 50 is extended again for at least another three months to January 31st. Incidentally, this is the date that Mark Carney is due to depart the Bank of England. In this three month window a snap general election would likely be called, out of which I would expect the Brexit Party to gain enough support to be the deciding factor in the make up of the next government. A Boris Johnson / Nigel Farage coalition would fully encapsulate the narrative of a resurgence in political nationalism, and set the UK on a course for a ‘hard‘ Brexit come January.
An October 31st exit is not certain, but it feels more likely this time around than the original leave date of March 29th. Especially with Boris Johnson in Downing Street.

With the U.S. economy consumed by tens of trillions in debt and fundamental economic data showing increasing signs of a downturn, a conflict with Iran in the short to medium term could be a catalyst for the U.S. falling into recession.
Since central banks began to tighten monetary policy – in particular the Federal Reserve with its balance sheet reduction scheme – we have witnessed a perpetual rise in political conflict. The false recovery narrative that grew out of the 2008 crisis, coupled with the re-affirming of inflation targets that were abandoned pre Brexit and Trump, presented central banks with a window to tighten financial conditions. If the past is any guide, then they will once again allow multiple crisis scenarios to reach a tipping point before contemplating some form of renewed stimulus.
Inducing crises is how globalists have historically gained greater power over the financial system. The question is how they will respond to what I believe will prove to be an inflationary recession / depression. The mandate for 2% inflation remains prominent in their communications. If that persists then do not count on central banks to support markets indefinitely.

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