You think Washington, DC is a mess? To witness even worse political disarray, look to our cousins across the pond. It was once said that the sun never sets on the British empire, but at present the United Kingdom is anything but united.

Last year’s referendum vote for Britain to leave the European Union represented a stunning example of unnecessary, self-inflicted national harm. However, 10 Downing Street’s inept response has heightened the economic and financial dangers. To use British slang, Brexit has become a colossal “cock-up.” Below, I show you an easy way to profit from this latter-day Battle of Britain.

Investor concerns over Brexit had been easing, but in recent weeks the planning for Britain’s inevitable departure from the EU has become a shambles. The consequences are particularly grave for Europe’s financial services sector, which depends on a smooth-running London. Brexit’s toll on London, the banking hub of Europe, is poised to spill over into the region.

More’s the pity, because Europe’s economy as a whole has been strengthening. As I’ve written in previous issues, select Europe-based multinational blue-chips are undervalued and positioned for outsized growth.

However, as Britain’s government flails and expectations for a “soft” Brexit wane, the European financial services sector is on course to take a hit.

The Silly Party…

Top leaders and civil servants in Britain last week warned British Prime Minister Theresa May that infighting among cabinet ministers and unreasonable goals are likely to torpedo hopes of a smooth departure from the EU.

The Tory faction that pressed for Brexit was caught unprepared when the referendum actually passed. No one had a plan and the finger-pointing started immediately. The current clownishness among Britain’s political class reminds me of the famous Monty Python sketch that satirized a fictitious British general election fought among the Conservative, Labour and “Silly” parties.

In the wake of Brexit, Theresa May’s ruling Tories are playing the role of a real-life Silly Party.

May’s party put in a disastrous showing in the general election in June, unexpectedly losing seats to Jeremy Corbyn’s Labour Party. In recent days, the politically hamstrung May has encountered renewed demands from supporters and opponents alike to soften her stance against the EU or face the inevitability of a “hard” Brexit that harms Britain’s economic interests, the banking bastion of London in particular.

The unpopular May insists on playing hard ball with the EU, but the problem is, her Tory party no longer wields a stable majority in Parliament. An initial round of Brexit talks between Britain and the 27 other member states of the EU largely focused on scheduling. Brexit negotiators are scheduled to meet again in August, in an attempt to hammer out their differences on a wide range of disagreements, including trade subsidies, immigration quotas, and the size of Britain’s financial bill to Brussels for exiting. Deal or no deal, the UK must depart the EU on March 29, 2019. And the two sides are farther apart than ever.

Richard Aboulafia, vice president of analysis at the aerospace/defense consultancy the Teal Group, keeps a keen eye on global economic trends and spends much of his time in London. He summarizes the impending Brexit disaster:

“The rest of the world seems to be slowly backing away from closed borders. The Trump administration has reversed every single daft Make America Great Again anti-trade idea it ever proposed, particularly the ghastly Border Adjustment Tax.

France’s Emmanuel Macron campaigned and won in May on a globalization agenda. Germany’s Angela Merkel and Canada’s Justin Trudeau are proving able champions for the cause too. Only Theresa May’s Britain is still eagerly paddling towards the economic nationalism waterfall.”

Britain’s unsure destination…

I’m about to explain a one-step strategy that allows you to profit from England’s folly. I’ll also unveil a trading method devised by Investing Daily’s money guru Jim Fink that makes big gains in good times or bad.

Among all the worries that Britain’s vote to quit the European Union has generated, the most pressing is whether the EU’s big banks face trouble from Brexit.

Britain alone accounts for nearly 6% percent of global stock markets and dominates Europe’s financial services sector. London is home to the world’s largest number of banks and the largest commercial insurance market. About €1 trillion, or nearly 40%, of Europe’s financial assets are managed in London. Brexit would undermine the efficiency, transparency and flexibility of doing financial business in London. Other major European cities, notably Frankfurt, stand ready to snatch lost business from a floundering London.

It’s increasingly apparent that Brexit will add stresses, costs and complexities to the EU’s financial system. Meanwhile, low or negative interest rates continue to hurt EU bank profits at a time when they still have plenty of debt. The damage from Brexit also includes an estimated gross bill of about €100 billion imposed on Britain by Brussels, to cover the hole in EU revenue that would result from Britain’s departure.

For pessimists with a dim view of Brexit, here’s the most direct way to profit: by shorting the iShares MSCI Europe Financials ETF (NSDQ: EUFN). With net assets of $1.1 billion, this exchange-traded fund is comprised of nearly all the big European banks and serves as a bellwether for the EU’s financial system.

All European banks face danger in this fraught environment, but for American investors it can be difficult to make bets against those banks because some don’t trade on U.S. exchanges. Moreover, exposing yourself to shorting one individual bank is extremely risky.

The EUFN’s five top holdings by percentage of the fund’s assets are HSBC Holdings (NYSE: HSBC), Banco Santander (NYSE: SAN), Allianz (OTC: AZSEY), BNP Paribas (OTC: BNPQF), and ING Groep (NYSE: ING).

Look for EUFN to start falling, as implacable EU officials press for a harsher divorce from Britain and the country’s politicians continue to show a failure of leadership. Also keep in mind that the alternative to Theresa May is the far-left Corbyn, whose unforeseen political ascendancy is making European business leaders skittish.

EUFN should be considered a short- or intermediate-term holding, to capitalize on the Brexit bumbling that should continue to unfold between now and early 2018.

Do you have questions or comments? Send me an email: mailbag@investingdaily.com — John Persinos

Fearless trading with Jim Fink…

Winston Churchill, the British Prime Minister who was instrumental in defeating the Nazis during World War II, once said: “Never surrender.”

Neither should you surrender to investment turmoil. As I’ve just explained, Brexit anxiety is mounting. If you’d like a time-tested way to make consistent profits during this period of extraordinary uncertainty, turn to Jim Fink, chief investment strategist of Velocity Trader.

In fact, Jim’s moneymaking technique is so successful and simple, you might want to give up “conventional” investing forever. Jim makes you this challenge:

“If I don’t deliver 24 triple-digit winners in the next 12 months… I’ll cut you a check for $1,950.”

Jim already has made good on his promise. In less than a year, Jim racked up 24 triple-digit winners, along with more than 30 double-digit winners.

Want to know how he does it? Click here now to learn more.