Today in Brexit, Day 1,007

When last we left our Brexit-pondering UK Members of Parliament (MPs) and Prime Minister Theresa May, all were on tenterhooks to see whether EU officials would grant her request for a short delay—and what would happen after that. In a rare showing of unity and swift action, EU leaders agreed last Thursday to punt Brexit until May 22—the day before European Parliamentary elections begin—but only if MPs approved her Withdrawal Agreement. The same agreement they had twice rejected. Failing that, May would have until April 12 to announce her next move. Otherwise, a no-deal Brexit would happen by default then. That left May scrambling to shore up Parliamentary support this week, but that effort has floundered. First, she pulled a planned early week vote. Then, MPs voted Tuesday to hold a series of “indicative votes” on Wednesday—testing the waters to see which possible Brexit path could secure a majority. Hilariously, every one failed. Meanwhile, May, in a last-ditch effort to push through her Brexit deal, promised she would resign in short order if it passed. That reportedly inspired a couple dozen more euroskeptic Conservative MPs to pledge support for the deal, but House of Commons Speaker John Bercow has doubled down on last week’s rejection of a third vote absent substantial modification to the legislation. In short, about the only thing certain right now is that the UK will not leave the EU on Friday, as MPs overwhelmingly voted to delay the departure date. So yet again, there is a plethora of Brexit headlines swarming in media—and lots of Breaking News alerts hitting our inboxes. But in reality, little has changed. Uncertainty persists and nobody sees a clear path for the UK leaving the EU presently. Ending this loop of headlines, votes and debates yielding nothing definitive is why we continue to argue that whenever stocks finally gain Brexit clarity, be it next month, next year or beyond, simply ending the circus should bring relief—regardless of what Brexit looks like.

Consider the eight measures MPs rejected on Wednesday, and it is readily apparent how weird a turn this has taken. In short order, they said no to:

• Accepting a no-deal Brexit on April 12
• A super-soft Brexit amounting to a modified version of Norway’s arrangement (aka “Norway Plus”)
• Adopting Norway’s arrangement, only without membership in the EU’s customs union
• Entering the EU’s customs union
• Labour’s alternative plan, also centered on a customs union
• Revoking Article 50 in order to prevent a no-deal Brexit
• Holding a second referendum to get public confirmation for whatever Brexit ultimately passes Parliament
• A “stand-still” period preserving all present arrangements if a no-deal Brexit happens

Fold in the repeat rejection of May’s deal, and you have a whole lot of huh? They don’t want the current deal. They don’t want a no-deal Brexit. They don’t want to do anything extreme to prevent a no-deal Brexit. They don’t want a fail-safe to ease a no-deal Brexit. They don’t want a customs union or anything resembling it. And, mercifully for markets, they don’t want another referendum. What do they want? Who knows. A pony, probably. Maybe a zero-calorie—and delicious—chocolate cake. Perhaps equity-like growth with capital preservation.^[i]

As for May’s deal, she still appears to be pushing for a Thursday vote, despite the Speaker’s objections. Maybe she’ll add a page of wingdings (e.g., ) to meet the “substantially different” requirement. Adding another wrinkle, Northern Ireland’s Democratic Unionist Party, which props up May’s minority government, says its MPs plan to reject the deal again if and when it comes to another vote. So does a group of Conservative euroskeptic stalwarts calling themselves “Spartans,” one of whom said May’s “pantomime” of offering resignation threw him into a “ferocious rage” and made him want to “tear this place down and bulldoze it into the river.” Emotions are running high, clearly. For more such fun, please see the live blogs at The Telegraph or The Guardian.

We won’t even try to handicap probable outcomes over the next two days. This story is so fast-moving, it risks being outdated by the time we copyedit and post it. Nor will we begin speculating at who could succeed May if she indeed resigns earlier than planned—oddsmakers predictably favor Boris Johnson, but they did so the last time, too.

The good news is, one way or another, all of this uncertainty will eventually end. It could end tomorrow or Friday, if May’s gambit works. It could end April 12, if a no-deal Brexit happens by default (still possible). It could end in May (the month), if some other agreement passes muster with Parliament and EU leaders by then. It could end in a year, if they kick the can that far out. It could end in two years, if they kick it even further out. But falling uncertainty, in and of itself, is a matter of when, not if. One blessed day, investors and businesses will know exactly what Brexit will look like and when it will take place. From then on, they can finally unleash all the long-term plans and investments they kept on ice during this epic saga of disagreeing and dithering. Markets will price in that falling uncertainty, which should bring stocks overwhelming relief.

But until that day, weird things like Wednesday’s events remain possible. But we remind you to stay even-keeled and not presume each emergent headline dubbed breaking news is actually a breakthrough of any kind.