The major event of this week isn’t the opportunity to listen to Janet Yellen avoid answering a single direct question while talking out of both sides of her mouth after the FOMC meeting ends on Wednesday, but the upcoming referendum on independence in Scotland on Thursday. As someone who spent the better part of a year living in the UK, I have to admit that my emotions are conflicted on this one. As someone of English (and Scottish) descent, I’ve always been drawn to the UK and I learned so much during my time there. Like “spotted dick” is not what you think, that nothing good ever happens at last call and that no matter what the situation, Frenchwomen are never to be trusted.
Mostly I’m having a hard time trying to decide who the bigger ass in what has been the single most reprehensible event in British political life since ever. One on the one hand, you have a British PM who gambled on a referendum to settle an issue that ranked pretty low in a country ravaged by multiple recessions in the last few years and on the other you have megalomaniac in the Scottish first minister who’s decided he rather be the leader of a small country than the governor of a small portion of a much greater one.
And with polls still showing the “yes” and “no” camps running neck and neck with each other, it’s been an understandably rough summer for British stocks. While performing better than their single-currency counterparts on the continent (EZU), they’ve noticeably lagged U.S. stocks with the S&P 500 up 3.15% from June 1st through today versus a loss of .59% for the FTSE. Using EWU as a domestic proxy, you can see the drubbing the ETF has taken over the summer (it’s down 3.1%) and especially around September 8th when those in favor of Scottish independence briefly moved ahead in the polls. Lately the volume has shifted in favor of the buyers, but EWU has been trapped below its 200 day simple moving average and has more resistance at the 50 day. EWU will be the fund to watch on Thursday morning. The Yinzer Analyst is tempted to buy EWU at these levels because he wants to believe that the Scots aren’t crazy enough to vote for independence but having lived in the UK, he knows that when it comes to gambling on a Scot to do the smart thing, there is no sure bet.
How realistic are the prospects for Scotland choosing independence? There is literally no end to the logical arguments being made to preserve the Union, mostly by pointing out what a dire fiscal situation Scotland will find itself in after independence. Honestly, within 5 years they’ll either be opening casino’s or the country will look like something out of a Mad Max movie. If you want to read more, I’d encourage you to stop by the Financial Times here.
But like most American’s, I get my news from “alternative sources” and to that end, let’s listen to persuasive arguments being made in favor of the Union by that most famous of Brits, John Oliver and the most famous Scot in the world.