Pro Perspectives 10/22/19

October 22, 2019

We've talked about the Brexit deal over the past few days. 
The deal that was struck between the UK Prime Minister and EU officials last week, was indeed approved by Parliament today! 

However, what wasn't approved today, was the timeline on how long it will take Parliament to agree on how to legislate it.  With that, the formal exit of the UK from the EU may happen at the end of month, or may not.  The ugly process of law making will likely take longer than nine days, but importantly, this continues to signal that both sides are ready to move on — as we've seen in the case of U.S./China trade dispute.  The removal of uncertainty is good for the global economic outlook.

But EU officials now have more certainty on what the deal looks like for Europe. 

With the above in mind, we have a big European Central Bank meeting on Thursday.  Remember, last month, the ECB announced that it was going back in the QE business, to start buying assets again in November.

Their stated plan, at the moment, is not to change the asset mix from their past asset purchases, which consists of corporate and sovereign bonds.  The question is, will the ECB step up the firepower, to manage any increased downside risks associated with the terms of the Brexit deal? 

As we've discussed here, adding European equities would be the "bazooka" of monetary stimulus for the European economy. 

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