Brexit Reverberations

By Jason Winder

The United Kingdom's vote was certainly felt by the markets. Stock markets around the world plummeted, oil prices moved lower and interest rates fell to record low territory. These low rates are spurring another round of refinancing across the land and these rates are expected to spur home sales as well. Meanwhile, as we mentioned previously, there is much that will have to play out before we see what the real long-term effects will be with regard to the move of the UK out of the European Union. Our stock market seems to have realized this fact as it has already recovered the ground lost.

For example, now there is a Regrexit movement which calls for a "do over" referendum. If that happens, the markets may breathe a sigh of relief, but there still will be an air of uncertainty. For example, if Regrexit moves forward, would Prime Minister Cameron withdraw or delay his resignation? Will the Brexit vote stir other countries to act? The timing and format of the exit is certainly up in the air. From our point of view, the biggest question market watchers are asking is -- how will the issues in Europe affect our economy?

We have important economic data coming out this week. As important as the job report is-we must keep in mind that the data covers a period which is mostly before the Brexit vote. Nevertheless, it is an important report, especially considering how weak last month's employment report was. Analysts will be looking at whether the numbers bounce back and if May's jobs numbers are revised upward. In light of the initial reaction to the Brexit vote, any spark of good news will be helpful. Our stock market has already experienced a great post-Brexit rally and moderate-to-strong employment growth could continue to bolster stocks as long as rates stay low.