The Brexit Lesson

England Vote Presented Uncertain Future

England had a historic vote and half the population was ecstatic, believing things would get better overnight while the other half was wondering what it really means for their country.

The reality that will settle in for the British people is that there will be no instant change in terms of economic growth, prosperity, and happier citizens. Instead the future is fraught with more uncertainty than has been present in England since WWII.

Revolutions sound wonderful, until the hard work of adjusting to massive changes begins. For the US Stock Market, the impact will be specific to corporations who are heavily vesting in the United Kingdom or have more than 10% of their revenue income from England.


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Those corporations who do not have a strategic interest in Britain, will continue to grow on their original business cycle path with minimal disruption.

England, being an island nation imports heavily but the US is not its largest import country. 



The US is one of the more important countries for exports for the United Kingdom.


The changes going on in England could potentially cause the British pound to fall in value against the US dollar, making imports cheaper from the UK for US citizens, companies, and corporations.

England Exports:

1. The mainstay of England’s exports are Professional, Scientific, and Technology Services.  As a small island nation, services are a huge part of its economy.

2. Information and Communication Technology are the second largest export from the UK to the US. If the pound loses value which is likely, then these services will be cheaper for US corporations.

3. Financial and Insurance Services are the third largest export. This is a big part of the financial industry, and again lower pound values will make these services less expensive to US corporations, and the financial industry in the US.

However the percentage of UK exports to the US is small by comparison to the  exports to Russia, Canada, India, United Arab Emirates, Germany, China, Hong Kong, and other countries. The US does not import or export heavily with England.

Although the US Stock Market sold off sharply on the day of the news of the Brexit vote passing with a small majority, the overall long term impact will likely be less than many traders and investors believe.  

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The hardship will be felt mostly in England as the total reinvention of their economy, financial system, Trade Agreements with other countries, Treaties, and standing in the world will be changing slowly over a far more extended period of time than many British may realize.

Summary

Change is exciting to imagine, but in reality change of this magnitude is always much harder with many surprises, disappointments, and challenges.

Most US companies are well postured to weather the storm of news media hype which inspires panic, fear, greed, and volatility in the markets. After the people of the world tire of this story, the markets will return to the underlying fundamental values that drive economies worldwide.

Want deeper detailed facts about the British Brexit Vote? How it could impact your held stocks? TechniTrader will email you a courtesy PDF file packed with specifics of the magnitude, long lasting and far reaching effect this vote presents.

For extensive research by Martha Stokes CMT go to TechniTrader & Sign Up, then in the Sign Up window text box request “Brexit PDF.”

Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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