Opinions expressed herein are those of Brett Ewing and S. Lance Mitchell and do not represent those of Centaurus Financial, Inc.
Brexit isn’t Happening, Weaker Dollar Tailwind Will Continue if the FED Doesn’t Hike in July
- On June 23rd Brits will head to the polls to vote on a referendum on the United Kingdom’s membership in the European Union
- This has been an attention grabber across the world & is being touted by many as the start of the collapse of the entire European Union should citizens vote to “leave”
- This unknown has created a consensus in the thinking that the FED will wait until the vote to decide on whether to increase rates, thus passing on June & putting July on the table
- While many site the recent polling done by several UK outlets that now show the “leave” side moving ahead of the “remain” side as the cause of recent market volatility we believe that this is not the case
- Much like our last presidential election and the polling done leading up to that election flaws abound and do not tell the real story
- In the polling for Brexit “undecideds” consistently make up somewhere around 10% of responders
- Most people who are calling for the Brexit to happen are citing the tendency of undecideds to break towards the challenging side – this phenomenon does exist when voting for people but not for issues
- When facing an issue that directly effects the person voting it is much harder to pull the trigger for change than it is to simply vote for a person they are trying to identify with
- The other key differences in the polling comes from the discrepancy in online versus telephone polling – in telephonic polls, one call and you are done, the remains lead by a wide margin – in online polls where you can vote multiple times and are nameless, the leaves are winning
- It is our belief the identifiable telephonic polling is much less susceptible to errors in sample size and veracity of belief than the online polling
- The vocal minority is no doubt ready for a change and to leave the EU, so they attempt to skew the polls in any way they can to drum up support for a winnable cause—this is most easily done through online polling
- “Remain” has consistently been ahead in telephone polling and while earlier in the year it tightened slightly, the numbers haven’t changed much in the past few months
- If Brexit does indeed fail like we think it will, the next spotlight will be put on the FED & whether or not a hike is coming in July
- If the FED sticks to its data dependent message and acts accordingly, they will forgo a hike in July because of the weak labor and service related data that has come in recently
- A lack of Brexit & no rate hike in July should propel stocks to new highs on the tailwind of a weaker dollar and stronger international stability
Securities and advisory services offered through Centaurus Financial, Inc., member FINRA and SIPC, a registered investment advisor. Centaurus Financial, Inc. and First Franklin Financial Services are not affiliated companies. This presentation is for educational purposes only and is not intended for investment advice or a solicitation of services.