The big vote comes next week in England, citizens will decide in a referendum whether the country should exit the European Union. The stakes are high only to the extent England is a ‘money’ country. Basically if they choose to leave then any support to the EU from England would likely evaporate, but this may open the door for other strong economies to hit the exits, too. Similar to ‘grexit’ last year with Greece, this is a major test of solidarity for the EU.
Should this concern the US investor or anyone else for that matter? Actually, it should not be of a concern, but it’s the uncertainty that raises the fear level. The media has been hyping this event as something earth-shattering, as polls flash each day in favor or in opposition. This will be resolved soon, and the hype will die down.
Unfortunately, the fear will be seen in rising volatility. If there is one thing the markets hate it is uncertainty, The markets will likely be in the clutches of a currency swarm, the pound with some big moves up/down while the euro may be driven into a tailspin. All of this will no doubt have a short term effect on markets, but when the fear subsides and the outcome is known – it’ll be time to move forward.
