Silver and gold will be stolen away,
Stolen away, stolen away,
Silver and gold will be stolen away,
My fair lady.
Three attacks in three months, twice on the Bridge. Unfortunately this is a refrain all too familiar to the British not just recently but historically. They have demonstrated their resilience socially and economically since the late 1930’s in the face of small- and large-scale terrorist attacks, and there is little to suggest otherwise this weekend. Much has been said and written already and more is yet to come on the sociopolitical implications of this drumbeat of violence, but our role is to examine the capital markets implications.
We expect UK markets to continue with little change based on this tragic incident. Tangentially related, the unfolding fracas in the Gulf will probably be more material to energy and broader markets as Saudi, Bahrain, and UAE spar with Qatar over terrorism and the Muslim Brotherhood. But, looking down the road just a scant few days, we are keeping a close watch on the snap UK election.
As we wrote previously, T. May calling the election may have propped open the door a notch to some moderation around Brexit if her contingent showed poorly on the 8th. However, the shock of yet another terrorist incident could further harden positions on matters of border security, immigration, and public support programs and propel the Conservatives and UKIP toward a more certain path of disengagement. If the isolationist forces in the UK win out and the moderate Eurocentrics hold the line in the French parliamentary elections later in June, our attention will likely be drawn increasingly to a Europe ex-UK as the reasoned place to deploy capital and own risk outside the United States.