So far in 2016 it feels like the bad news has far outweighed the good news. During the first half of the year investors were forced to cope with economic concerns, surprising presidential primary outcomes, volatile commodity prices, terrorist attacks and uncertainty from Central Bank leaders. Unsurprisingly, the result was extremes of sentiment that caused markets to fluctuate significantly.…READ ON
BREXIT – A Political Earthquake Felt Around the World
On June 23, the UK voted by a narrow 52-48% to exit (coined BREXIT for Britain’s exit) the 28-nation economic and political bloc called the European Union (EU). It was a non-binding referendum, which means lawmakers in Britain could ignore the results, but that seems unlikely. In a nutshell, dislike of EU regulation and immigration requirements trumped the economic uncertainty of a BREXIT.…READ ON
U.S. Impact
As the political fallout continues, many at home are asking, “How will this affect U.S. financial markets and the U.S. economy?” No one’s crystal ball is perfect, but let’s take a reasonable stab at it. It’s hard to see how this alone becomes a Lehman moment that crashes into the credit markets and destroys liquidity. One week following the BREXIT vote, credit markets are functioning well. Banks in the U.S. are in much better shape today as the latest Fed stress test corroborates, the consumer is healthier than in 2008, and housing is on a firmer ground.…READ ON
A Look Ahead
The UK is in a unique position as a member of the EU, while not being a member of the Euro currency bloc. Likewise, the UK maintains one of the strongest independent central banks in the world, the Bank of England. The UK’s access to the Bank of England strengthens significantly i ts opportunity to provide internal financial support at this time. However, it also complicates the equation for currencies globally. As a result, much of the volatility we have seen since the vote is driven by significant swings in currency values globally.…READ ON
