Date: The day after the UK voted to exit the European Union (AKA Brexit)
I am sure the UK supporters for remaining in the European Union feel how Taylor felt at the end of the “Planet of the Apes” (1968) after he dismounted his horse that is carrying him and his girlfriend, Nova, and the camera pans across large metallic metal spikes that look like tank traps, and he says,
“Oh my God, I’m back. I’m home. All the time, it was. We finally really did it.” Then he falls to his knees and screams “You maniacs! You blew it up! Ah, damn you! God damn you all to hell.”
The hand writing, or Banksy, that the masses would vote to exit the European Union, was clearly on the wall. The polls seemed to point that the vote would be to stay in the EU, though it would be close; however, there were two polls that did call the exit vote correctly: @OpiniumResearch and @TNS_UK. Those that didn’t believe that an exit vote was in the cards was Wall Street; judging by the 1.3% rise in the Dow Jones Industrial Average the eve of the vote from the 17,780.83 to 18,011.07- they are also probably the the same people that thought that the Warriors up 3-1 on the Cavaliers would win the title. The prognosticators underestimated the tenacity of the foe and were not in tune with the mood of the electorate: status quo must go.
Every nation wants its sovereignty and though the common currency, gave unencumbered access to the EU partners, and the ability to create large trade agreements were benefits, it was outweighed by what the masses felt were the short comings of being part of the EU: not being able to have full control who enters and vet those that cross borders because entering one EU country was a pass to all; having the possibility of national laws struck down by an EU court; and, if the status quo so great, then why do I feel threatened in my financial prosperity and security?
Who’s next in line to leave the EU? I do believe that more countries will chose to exit the European Union, especially if the EU does not address the free rein issue of the public. This was not a large issue before, but given the numbers of of those seeking migration, the pedestrian growth in GDP in many countries, it does create a burden to the countries accepting those migrating-especially, when there is no real plan to incorporate them into the country and the financial burden that they represent.
It will take time some time for the UK, or what remains, if Scotland, etc., choose to leave, but the UK will be fine. The pound sterling has fallen, which was expected:
- British Pound to euro exchange rate today -4.63% at 1.2458, lowest at 1.2018.
- Euro to pound exchange rate: 0.8065 best at 0.8321
- Pound to dollar exchange rate today -7.44% at 1.3766, lowest at 1.3218
- Pound to Australian dollar exchange rate today -5.25% at 1.8508, lowest at 1.8005
- Pound to New Zealand Dollar exchange rate today -5.76% at 1.9349, lowest at 1.8869
- Pound to Swiss Franc exchange rate today -6% at 1.3390, lowest at 1.2854
- Pound to Yen exchange rate today -11% at 140.07, lowest at 133.20
It will continue to vacillate in the weeks to come as the transition becomes clearer, as the pound loses the strength it had as part of the EU.
My outlook for the DJIA is one that hasn’t changed since August 2015: the market is overvalued and given the weakness in earnings to come, there is no reason the market should be above 15,386.82 Thus, the market still has room to drop.