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Brexit: Tempest in a Teacup?
Monday, June 20, 2016
For the past 2-3 weeks, the market has been feeling a headwind of question marks related to whether Great Britain would vote to exit the European Union (EU), which became known by its useful moniker “Brexit.” Not to be confused with the earlier “Grexit” — in which Greece was thought to exit the EU based on its lowly economic standing within the union — the Brexit movement seemed to be run by British nationalists disinterested in as siting the broader EU in favor of its own country’s interest.
Beyond economic policies, the Europe-wide immigration crisis — where poor and disenfranchised citizens from Syria, Libya and other war-torn countries — has also played a part in the discussion regarding Brexit. Again, domestic nationalistic tendencies have reared up; disallowing refugees from failed states is a major component for British organizations in favor of dissolving formal ties with the EU.
However, following the assassination of British Parliament representative Jo Cox late last week has shifted the focus from Brexit being a responsible economic option for Great Britain to a radicalized movement led by extremists. Following Cox’s murder — at which her assailant was reported to have shouted “keep Britain independent” — opinions regarding the Brexit vote have shifted toward Britain remaining in the EU.
British citizens vote on Thursday. True, this leaves a few more days of vigorous campaigning to shift political winds in the opposite direction, but for now it appears Brexit worries are little more than a tempest in a teacup.
What does this mean for investors in the U.S.? Check the futures this morning: the S&P 500 is up 25 points, Nasdaq up 50 and the Dow 30 is up a whopping 200+ points. We know markets abhor uncertainty, so the Brexit vote appearing settled this morning has already gone a long way to reduce the wall of worry. After all, Great Britain remaining within the EU represents business as usual, whereas Brexit would usher in a host of uncertainty.
Mark Vickery
Senior Editor