European Commission in Panic Over New Brexit Poll
In 17 days time, on the 23rd. of June, Britain goes to the polls to decide whether to stay in the European Union or not. Should Great Britain opt to leave it will send financial and political shock waves around the world. Many believe a win for the leave faction would put Europe’s stressed banking system under such pressure that a “Lehman Brothers-type event” could occur, the main candidate being Deutsche Bank with its 75 trillion derivatives exposure. Thus, June 2016, could turn out to be one of the most volatile trading months in financial history.
Last week the Guardian Newspaper in London reported that for the first time the leave campaign had moved into the lead in a “poll of polls”. This news sent the European Commission into a blind panic and a secret meeting was called at the highest level to set in place plans to deal with England’s potential exit. Up until now the Commission refused to admit it had any such strategy in place, as they believed such a “statement” would add credibility to the leave camp.
This is what Daniel Boffey of the Observer had to say this Sunday:
Opinium survey suggests remain camp has lost four points in two weeks, as Boris Johnson (Mayor of London) prepares to campaign on immigration and security.
The leave campaign has picked up momentum and taken a three-point lead over remain in the latest Observer/Opinium poll on the EU referendum. The Brexiters now stand on 43%, while 40% say they support the campaign to keep the UK in the union.
The potential in the leave campaign’s strategy is reflected in responses suggesting that two in five voters (41%) cite immigration as one of their two most important issues when deciding how to vote. Just over a third (35%) cite Britain’s ability to make its own laws without EU interference and 29% cite the impact of leaving on the UK economy.
Half of the 2,007 people surveyed said they believed immigration would be under better control if the UK did leave the EU. Twelve percent felt the UK would have more control if the country retained its EU membership, and 24% said there would be little difference.
Johnson is expected to launch a campaign to highlight the security dangers of EU membership, including the possibility of Turkey’s accession to the EU, this weekend.
However, the leave campaign also believes that, if it can keep the headline polls close, a relatively poor turnout among Labour voters who support remain could deliver it victory. The findings came as Johnson, who has been posing increasingly as a prime minister in waiting, told the Observer that he believed no genuine “liberal internationalist” could support the EU.
The former mayor of London joined forces with Gove, the justice secretary, to suggest that a vote for Brexit could deliver improved social justice. He added: “The impact of EU-enforced uncontrolled immigration to the UK – made worse by the euro crisis – has been to depress the wages of the low-paid, while fat cat FTSE-100 chiefs have seen their pay packets soar to 150 times the average pay of their workforce. It is time that liberals everywhere saw the EU for what it is: essentially a stitch-up between the very biggest corporations, their lobbyists and the commission to frame regulation in such a way as to keep out the competition, especially … from start-ups and innovators.”
The poll by Opinium also issued a different set of figures using an alternative methodology to try to reflect the fact that online samples are sometimes seen to over-represent socially conservative respondents, who may be more likely to favour Brexit.
With the adjustments to the make-up of the sample surveyed, remain keeps its lead. Opinium found that 43% of UK adults said they would vote to remain in the EU in a referendum, while 41% would vote to leave the EU and 14% don’t know how they would vote. Generally the polls show an electorate split by social class, region and party political affiliation. The more affluent favour staying in the EU, while older people are typically more likely to back Brexit. London is a stronghold of the remain camp, while the East Midlands tends toward leaving. Areas such as north-west England are more evenly poised.
Nearly half (48%) say Cameron should resign if Brexit occurs, 32% that he should not. Remain voters are evenly split (42% either way) while leave voters overwhelmingly say he should resign (65% to 22%).
Short Term Trend: Flat
Medium Term Trend: Bullish
Long Term Trend: Flat
Long Stochastics: Overbought
Short Stochastics: Overbought
VIX: Very Low/Market Risk High
McC. Oscillator: Bullish
A/D Line: Bullish
The VIX, Slow Stochastics, and Fast Stochastics indicate that the market is very much overbought with risk growing with every upward move. However, given that the McClellan Oscillator is in its mid-trading range, prices may easily move higher without too much resistance.
Given the risk involved with the upcoming Brexit poll, it is hard to see Janet Yellen doing anything to rock the boat for the British Prime Minister David Cameron. Thus, I would expect her to hold on any interest rise this June. This realization, should it become generally accepted over the next week or so, could definitely propel the market to new highs.
On the other hand, a high volume break below the 17,000 level on the Dow Industrial would indicate that the next leg downward has commenced. Should this happen I reckon it could be very ugly indeed given the compressed nature of the 100 and 200 Daily Moving Averages at this price point and given that there is no real technical support until the 15,000 price level where a double bottom occurred earlier this year.
Charts Courtesy of StockCharts.com
Reference Source: Daniel Boffey, the Sunday Observer, 5th. June 2016.
About Christopher Quigley
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