Britain’s 51.9% vs. 48.1% vote to leave the EU was a significant surprise to markets today and an outcome that is still reverberating through the headlines.
 
As a part of my ongoing commitment to provide my clients with timely and insightful updates, I spent a majority of the morning listening to a line up of conference calls from analysts, strategists and economists around the world to produce a detailed recap of what’s happening and why it’s going to be ok.
 
The Coles notes?  Uncertainty is the culprit of today’s market volatility - and today was just the first day in what is going to be an unsettling period as the UK enters into a period of negotiation between its government and the European Union. That said, while there are very real economic and financial market consequences that emerge from this decision – mainly, the extent to which financial conditions tighten – the most important developments and risks are political in nature.
 
As discussed in the this Bringing Home Brexit commentary by our RBC GAM Chief Economist, Eric Lascelles,“the immediate financial market response was quite large, with the pound down by as much as 15%, the British stock market down by as much as 9% and the British 10-year yield lower by as many as 36 basis points. However, these moves have already been partially unwound and we suspect the long-term market effect will ultimately prove smaller than these initial moves”.
 
So should you be worried?  Other than adjusting our expectations for 2016 (I believe it will be a year to remember), the short answer is no.  There is little to fear and nothing to do - and while hearing that “it’s going to be ok” (to quote Gene from last week’s note) might be all that you want to hear, it is important to understand what happened this morning to maintain confidence in your long term plan.  If you did not receive a copy of my detailed-yet-digestible note this afternoon and would like to learn more about what happened and why it’s going to be ok, please let me know and I will forward it to you.