Broker Check

KEEP CALM AND (BY 51/49) BREXIT

June 24, 2016
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KEEP CALM AND (BY 51/49) BREXIT

Brexit is an acronym for the voter referendum in the United Kingdom (Ireland, Scotland, Wales, and England) to leave the European Union. The vote "FOR" to exit the Eurozone has, as expected, created uncertainty thereby volatility in the currency, bond and stock markets.

So what does this mean?

  • Prime Minister David Cameron will resign and leave office in the next few months.
  • The vote creates considerable political uncertainty which can lead to financial uncertainty and instability.
  • Equity markets across the globe are sharply negative this morning and U.S. interest rates are again falling.
  • Currencies are in flux with the British Sterling taking a big hit followed by the Euro. On the flip side the dollar and yen are higher.

And here in the U.S.?

  • The U.S. markets are poised for a soft opening.
  • The S&P 500 closed yesterday around 2113 and it appears it will open down about 70 points in the 2030-2040 range. Keep in mind the intraday lows earlier in the year for the S&P 500 were about 200 points below this level. Further, it is important to keep in mind that this historical vote creates a multiple year event as far as policy formation and subsequent implications play out.
  • Sharp moves today will not settle the issue here or abroad, this will take time and may create opportunities to own quality stocks and funds at lower levels.

The potential of market volatility is why we design investment portfolios based on individual risk tolerances. Reaction to events is not how we manage your investments. We have weathered many storms in the past by using a steady hand at the tiller; this is not an exception. Our strategic investment methodology aligned with your risk tolerance is our guide.

Please do not hesitate to contact your Russell Capital Advisor if you have questions or want to discuss further.