Globalists Panic Over BRExit – Stocks Tank Then Rebound
original article written by Net Advisor™
LONDON, England. The people of the United Kingdom voted to exit the European Union. Here we explore the EU, and some of the possible causes for the UK’s exit. We also look at what we see as an overreaction by the financial markets and by one credit rating agency.
[1] Overreaction.
My view is the markets overreacted to the UK’s exit. The UK/British freeing themselves from EU Socialism is the smartest thing they have done in 43 years. This is about global elitists pushing decades of failed economic and ideological policies on the working people, and the people had enough.
[2] Politics & Economics
Let’s first look at some key countries in the EU and see how they are currently doing.
EU Unemployment.
Unemployment data as of publish date. Stronger economic countries, have lower unemployment rates such as Germany 4.2% and UK 5.0% respectively.
Taxes. EU countries have among the highest tax rates: (Top tier taxes as of post date)
EU Income Taxes.
- UK 50%
- Italy 51%
- Spain 56%
- Germany 57%
- France 59.6%
- Netherlands 60%,
- Belgium 60.6%
- Sweden 61.4%
- Denmark 65.9%
In comparison, the USA’s top tax bracket is 39.6%.
So if you are part of the EU and you happen to make a reasonable living, odds are, a big chunk to a majority of your money will end up being redistributed elsewhere. This does not stimulate big investment like it does in the U.S.
[3] Credit Agency Threatens UK If BRExit?
Standard and Poor’s downgraded British debt on Friday June 24, 2016 from AAA to AA rating. S&P previously threatened to downgrade UK’s credit if they left the EU. I would argue this was punishment for proposing a vote to the people whether to leave the EU.
UK debt didn’t change one day before, or one day after the BRExit, yet they got downgraded by S&P anyway.
The result if a credit downgrade will cost UK people and banks more money, paying higher interest rates. This was not necessary. It should be noted that none of the other credit agencies downgraded UK debt.
[4] Stock Analysis.
In my experience in this industry (bio), the markets in general got it wrong. Last Thursday, June 23rd, the U.S. DOW was +230 on the thinking that the UK would stay in the EU. The market had to correct their gross miscalculation, creating global portfolio restructuring (sell-off) on Friday. The Dow fell -610, which was better than overnight futures had indicated (#DJIA -1000) (Tweet below).
Almost wish I was professional trader again.
HUGE $$$ to be made overnight & tomorrow. #Brexit US S&P Futures (curr) -106 = #DJIA -1,000— NetAdvisor.org® (@NetAdvisor) June 24, 2016
For a couple days wish I was trading again. I think the markets, media and establishment all misjudged the people and overreacted to the situation.
Notice that of all the global markets last Friday (June 24, 2016), post BRExit, the London stock market, FTSE 100 fell the least compared to the rest of the world.
Looks like The #UK #stockmarket is doing BETTER Than the #EU. #FTSE100. #Stocks. pic.twitter.com/RWI3rBPb1z
— NetAdvisor.org® (@NetAdvisor) June 24, 2016
The countries that saw their stocks fall the most were already in poor economic shape with high unemployment and fiscal mismanagement.
Two business days later on June 28, 2016, the U.S. Dow rebounded +269, and the FTSE 100 climbed +2.64% in a single day.
#Stocks Close Higher Today: #DJIA +269 #NASDAQ +97
S&P 500 +35
Sorry Chicken Little's. #Brexit— NetAdvisor.org® (@NetAdvisor) June 28, 2016
Three days after markets sharply fell, the Dow rebounded again +284 for a gain of +553 and change in just two days.
All the Chicken Littles‘ (Globalists) wanted everyone to fear that the sky was falling in the UK and its stock market. We’ll, since the BRExit vote from the EU, the London FTSE 100 has erased all its initial losses, and is now up 3.6%. I was almost imagining what would happen in Germany exited the EU, and what their stock market might gain?
Markets can retest recent lows before moving to a new direction, so I would expect to see volatility for a while until things settle.
Germany, after the BRExit is the only country in the EU now who is somewhat economically strong*1. Germany will now be carrying most of the financial burden to bailout EU’s socialized debt.
*1 GDP 0.7%, unemployment 4.2%, Debt-to-GDP 71.2% (as of post date).
[5] Security & Immigration Concerns.
There have been huge protests in the UK and Germany over the lack of vetting or tracking of refugees from mostly Syria. This can and likely was a factor in the BRExit vote.
The Globalists view is pro-open borders, uniting under a one-world government (so one body can better control the masses). This is also called Fantasyland. If one has any doubt, please go bring the protests and signs and push for Globalism in Iran, Syria, Libya, Yemen, or most countries in the Middle East, China or Russia. See how that pans out.
Other recent security concerns occurred when a British lawmaker was assassinated, although media calls it just an ordinary ‘murder.’ There had been increasing UK terror concerns, more concerns, and multiple terrorist attacks in Paris (2015), Paris (2016); other attacks in Brussels, Germany, UK, all within the Open Border’s EU.
There is also concern in the UK that 2 out of 3 British Muslims would not report a terror plot even if they knew about it in advance (more UK polling data). London also elected their first Muslim Mayor who immigrated to the UK from Pakistan. This is not to say such is good or bad, just in totality of the events may have further influenced BRExit vote.
[6] Obama Insults the UK.
To top it off, U.S. President Barack Obama left the golf course and flew to the UK and insult most of the country. Obama said if the UK left the EU that maybe someday, but not anytime soon, the U.S. might negotiate trade deals with the UK.
However, Obama who has less than seven months in office before his term expires, told the UK people in a speech that Obama (“representing” the USA) will be dealing with the EU first, and basically the UK will be in the back of the bus.
“…I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc—the European Union—to get a trade agreement done. And the UK is going to be at the back of the queue…”
— Pres. Barack Obama said in Speech Before BRExit Vote
Mr. ‘bring everyone together-Obama’ unless they are British – or Israeli?
Obama’s speech may have pushed the undecided UK people to exit the EU in spite of Obama’s insulting comments.
[7] Not the First BRExit
Many seem to have forgotten that the United States had their own “BRExit” in 1776, and I think that worked out well.
[8] What’s Next?
If Germany was smart, they should depart from the EU, or their people will likely become the piggy bank for the rest of the EU socialism.
Whether the BRExit happened or not, the EU is just a few steps from recession, and arguably some countries have been in an unemployment depression (Spain, Greece, and Cyprus). I am just waiting for something to happen that triggers a major EU recession.
The U.S. markets have been defying gravity with massive stimulus programs, artificially low interest rates manipulated by the FED, lack of real economic growth, record poverty, and debt growing like a cancerous tumor that virtually no one in Washington DC wants to address.
For the multi-decade long retirement planners, taking advantage when everyone is in sudden panic can be beneficial to the level headed-strategic thinkers. One just has to have reasonable understanding that the market is just adjusting to new data, and the current reaction is likely excessive.
I’ve discussed these stock market events with some people who still ask me whenever the market moves (down) rapidly. Funny, people rarely ask me what to do when the market goes up – which can be a mistake too.
A former Wall Street colleague and friend of mine used to always say:
“Never confuse genius with a bull market.”
I don’t see the UK collapsing, or going into depression, unless the rest of the world wants to pull all their money from the UK as further punishment from not being part of the Globalism (Socialism) elitist group anymore.
If that were to occur, we no longer have free markets, but rather Government/political-driven markets. That is when the whole thing begins to collapse.
Short of this, I discussed this overnight and next day post BRExit vote that this could be a great opportunity to acquire assets of solid companies with solid balance sheets.
Social media public discussion:
Almost wish I was professional trader again.
HUGE $$$ to be made overnight & tomorrow. #Brexit US S&P Futures (curr) -106 = #DJIA -1,000— NetAdvisor.org® (@NetAdvisor) June 24, 2016
So far those who mirrored the above thinking and bought at the lows when the market was tanking, did pretty well just a few days later.
#Stocks Close Higher Today: #DJIA +269 #NASDAQ +97
S&P 500 +35
Sorry Chicken Little's. #Brexit— NetAdvisor.org® (@NetAdvisor) June 28, 2016
The overall U.S. and global markets will have volatility which happens from time-to-time. Any major move up or down, tends to find a happy medium again, unless you are Japan.
About the Author:
Net Advisor™ spent many, many years as a professional trader, worked at a top Wall Street firm, actively managed a hedge fund family organization, and is a risk management consultant. Net Advisor™ held 9 licenses when working in investment industry, including two regulatory compliance/ supervisor level licenses, and held multiple areas of investment specialization. Read More.
Credits: Flag graphic public domain images modified by netadvisor.org staff. ‘European Markets’ graphic, CNBC; Tweets from Twitter®, USA-BRExit graphic tweet original source unknown. Please advise for credit. Original content copyright © 2016 NetAdvisor.org® All Rights Reserved.
NetAdvisor.org® is a non-profit organization providing public education and analysis primarily on the U.S. financial markets, personal finance and analysis with a transparent look into U.S. public policy. We also perform and report on financial investigations to help protect the public interest. Read More.
