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James Hyerczyk
Brexit, Symbol of the Referendum UK vs EU

There’s breaking news on Monday, but so far it has had a minimal effect the financial markets. According to reports, the European Union has agreed to give the United Kingdom three more months to exit the bloc. The price action suggests market participants anticipated the event or trader indifference after weeks of confusion over how it would all play out.

The details released just a short while ago show that European Council President Donald Tusk, who chaired the talks among the 27 European governments, announced the decision Monday morning on Twitter:

“The EU27 has agreed that it will accept the U.K.’s request for a Brexit flextension until 31 January 2020. The decision is expected to be formalized through a written procedure.”

Tusk’s announcement came after a meeting between the 27 European ambassadors, in Brussels, where they signed off on a third delay.

Much Ado about Nothing?

Another major announcement via Twitter. Perhaps that is why the markets barely sneezed at the news. It wasn’t even important enough to hold a press conference. Furthermore, you have to love it when these stuffy old EU guys try to go all hipster on the rest of us with their attempts to compress their messages into 140 characters.

Ok EU27 is acceptable, but “flextension”? Is that like “staycation”, a stay at home vacation? I guess he was attempting to keep up with the times because we’ve all gotten used to “Brexit”, which officially began as British Exit I suppose. I know he was trying to save characters, but then he typed “31 January 2020” ….so.

Can you imagine if Twitter were around while they were writing the Magna Carta or the Declaration of Independence?

The muted price action suggests investors may shelf Brexit for a few months while shifting their focus on U.S.-China trade and central bank activity.

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More Details

CNBC is reporting that a draft document prepared ahead of the meeting, signed on October 27 says, “With a view to allowing for the finalization of all steps necessary for the ratification of the Withdrawal Agreement, including the obtaining of the consent of the European Parliament, the European Council agrees to a further extension.”

“It notes that the Withdrawal Agreement will enter into force on the first day of the month following the completion of the ratification procedures by the Parties during this period, which ends at the latest on 31 January 2020,” the same document states.

Furthermore, “The European Council firmly states that it excludes any reopening of the Withdrawal Agreement in the future and recalls that any unilateral commitment, statement or other act by the United Kingdom should be compatible with the letter and the spirit of the Withdrawal Agreement, and must not hamper its implementation,” the document said.

Finally, “The European Council expects the United Kingdom to proceed in parallel with its ratification so that it can enter into force as early as possible.”

Conclusion, Comments, Clarifications

Trader response to the news seems to be indicating that most of the major players saw it coming. I sincerely hope that one day in the future this situation is resolved to the benefit of the U.K. citizens because at this time I suspect that government lawyers have been cleaning up at their expense.

Many years ago, the king of the one-liners Henny Youngman said, “A doctor gave a man six months to live. The man couldn’t pay his bill, so he gave him another six months.”

Why am I thinking that this Brexit thing isn’t going to end on January 31, 2020?

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