Today we bring you a special edition of Inside the Economy with SH&J. As many are now aware, last Friday, 52% of voters elected for the United Kingdom to leave the European Union after a 43 year partnership. While it is not a legally binding referendum, the UK will begin a 2 year clock negotiating the terms of their exit. As a result of the vote, the global markets fell approximately 12% and the U.S. markets fell around 5%.
The jury will be deliberating this unprecedented event for several months or longer but one thing is for sure, markets hate uncertainty and increased volatility is expected over the short term. Although we have been assessing the investment ramifications of a Brexit for some time (knowing that the polls showed the vote would be very close), we don’t necessarily feel it will have any significant impact on the U.S. economy. The correction of the U.S. markets in particular over the past two days, in our opinion, is primarily based on fear of change and has little to do with U.S. economic reality. The same cannot be said for England.