Brexit and pizza: a note from Chicago

The US is confused about what’s going on in the UK, but for many investors it is business as usual. Anxiety levels may have risen, but the usual trading rules still apply.


For most Americans, Brexit is still far away and confusing. True, a growing number of us can now find Europe and Britain on a map and many have even stopped calling the UK ’England’. Although Donald Trump may think Scotland voted ‘Leave’, most of us are now aware something big has happened, and without much of a plan. But with Boris Johnson’s last-minute withdrawal from the race for the role of prime minister, we’re even more confused.

A few traders and investors in this country will do as their counterparts in the rest of the world will: follow the trend, run stops, let their algorithms exaggerate small moves into larger ones, and make money. Those who can manage their emotions in this turbulent time will profit, to use a new term ‘bigly’.

Let’s not overlook that, for some, Brexit will mean profit, though the media might rather focus on how market moves are an expression of investor sentiment. I am always sceptical of that notion. Stocks are up on Thursday morning in Chicago time – are investors happy Boris is out, or cheering Mark Carney’s stimulus talk? Or are they just buying up bargains?

I am telling traders to follow the trend, take the news with a pinch of salt, and not try to pick tops and bottoms. Boring, I know. But not much has changed yet except our anxiety levels.

I called for the S&P 500 to be above 2200 by October and I see no reason to change that. But it could be 1800. In the short-term, there’s a roller coaster to be ridden for fun and profit. I doubt anyone can credibly predict more than that.

While market moves are not always about sentiment, traders are emotional, however much we might hold up our indicators and trendlines as proof of rationality. And when the UK is acting cray-cray, it makes us all unsure – not about any particular decision, but about how our ability to make good decisions will hold up. I, for example, just said ‘cray-cray’.

So some Americans expect to profit ‘bigly’ from this crisis. Many will be indifferent since Brexit is far away and doesn’t involve Kardashians. And some of us will worry, as old friends do, about how you will manage the leaving and – let’s face it – inevitable rejoining. We hope it won’t be too hard on either side and we hope soon you won’t have sides. The ‘U’ in UK matters to us in the US, as does the ‘U’ in EU.

Whether Article 50 is put off indefinitely or the EU lays down strict terms – whether banking moves to Frankfurt or a surprise ABBA/Spice Girls reunion concert brings you all back together – we’ll be watching with our usual mix of concern, confusion, and a secret disappointment that none of you are wizards or hobbits.

Here in Chicago, we have a Brexit connection, revealed by the Financial Times. It seems David Cameron reached his referendum decision in 2012 at a pizza place in O’Hare airport. The internet had a kerfuffle when the place was called a ‘Chicago pizza restaurant’. It is a sort of pizza restaurant and it is in Chicago, but it is not a restaurant that serves Chicago pizza. Cue angry people tweeting photos saying, ‘This is not Chicago pizza!’

It may seem odd that in the midst of the Brexit crisis, we should care so much about the pizza that may have inspired it. But you don’t know Chicago pizza and the people who love it. As I write, I am eating some real Chicago deep-dish pizza, from Giordano’s, just down Jackson Street from my office. Say what you like about it being basically a cheese wheel in a pie crust topped in marinara sauce. It’s delicious.

On June 29, the EU heads of state met in Brussels without the UK for the first time, calling for withdrawal ‘in an orderly fashion’ and making it clear that in the new relationship there would be no concessions on immigration and a higher access fee to pay than Norway. Ouch. It’s looking less like the UK are leaving than getting pushed out.

However, Brexit won’t solve the discontent the EU must address. Austerity is still a bad idea. Greece’s debt is under control for now, but everyone knows the EU is one crisis away from something the ECB can’t fix with monetary policy. And by ‘everyone’, I mean China.

My pepperoni-stuffed deep dish pizza is now done, and so is this note from Chicago. Maybe if Mr Cameron had eaten better pizza, he’d have made a better decision. No word on what they ate at that EU summit. If it was pizza, that would be darkly humorous. If it was haggis, that would be another thing altogether.

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