Post-Brexit Recovery Underway, But It’s Too Early For The All-Clear Signal

Here’s What We’re Thinking

June 30, 2016

Is the U.K. vote to leave the European Union (“Brexit”) a game changer? Does this seriously damage our  constructive view or is it just another geo-political event that the markets will eventually absorb and move past (such as 2011)? The answer in our view lies in whether Brexit either triggers contagion in the rest of Europe, and other large economies eventually also leave the E.U., or ends with the U.K., and the pressures unleashed by last week’s events fail to cause a wider institutional crisis. If Brexit doesn’t eventually lead to other countries leaving the E.U. then we could witness a period of a few months (ie. 3 to 6 months) wherein market volatility is elevated, the U.K. and Eurozone experience weaker growth over the remainder of the year and the U.S. feels only minor effects given its largely insulated nature (large size, domestic orientation, etc.)…

Read More…