With Britain’s population voting tomorrow to decide whether or not to remain in the European Union (EU), many investors are rightly questioning what impact this may have on the financial markets.
At this point there are so many variables, NOBODY knows what exactly the impact will be. Even if they do vote to exit the EU (aka, “Brexit”), their Prime Minister has said he will invoke a rule that will give him 2 years to negotiate the terms of the exit. So, even if they vote to exit, the final terms won't be known for a long time. While polls as of yesterday show the odds of an exit as being a toss-up, the bookies were showing the likelihood of staying as being closer to 75%, implying more money is expecting Britain to remain in the EU.
The U.S. financial markets will swing with sentiment regarding this vote, as we have seen over the past couple of weeks. I believe these swings will be more transitory in nature. Expectations as to the long-term impact at this point would be highly speculative, for the reasons noted above.
Glenn S. Rank, AAMS, President