Advisor Insights Market News Weekly Market Commentary

IMPORTANT UPDATE: The Brexit Response

Don’t fall victim to the extreme headlines.

Written by: Benjamin Bimson CIMA® / BCJ Financial Group

As you are fully aware of now, the Brexit vote on Thursday surprised the vast majority of the world with a vote to leave the European Union (EU).

We felt it important to put some perspective on things for you since the media is always there to make sure they take full advantage of the opportunity to be over-zealous in their response.

My favorite headline was the one on CNBC about “Worst Open Since 1986!” Yes, I am sure they are getting maximum clicks on that one! The reality is that the markets around the world have been basing their prediction off of a “stay” vote with polls showing about 25% chance of leaving the EU. The reality is that the relief rally that began Monday the 20th through Thursday the 23rd, really was what the markets were giving up.

Within half an hour of the markets opening “worst since 1986,” markets seem to be stabilizing. This vote, although unexpected in outcome will have one affect: uncertainty in the European markets and even in some corporate decisions over the next 2 years.

That is going to put pressure on both the monetary policy makers around the world and on corporations who want to dive into new business investments. It is really just a confirmation that anti-establishment votes are likely to continue and corporations are going to be cautious. This also was not the worst open since 1986 folks. In 2008 the markets took roughly an 8% dive in one day 10/13/2008-10/14/2008 as seen below.

 

brexit

The markets on opening post-Brexit vote have been orderly in comparison. We have time to look at this and assess. Things will be interesting going forward, but we aren’t in the middle of a total melt-down like 2008. Headlines will be extreme, but we are going to get through this! Watch out for falling victim to media’s emotional rollercoaster! More to come in our full commentary.

 

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