“If you can keep your wits when all around you are losing theirs and blaming it on you…” Rudyard Kipling
Now that the initial “shock” of the UK vote to exist the European Union is over, let’s look at why I stress keeping our ‘wits’ and emotions in check.
Yesterday morning, 6/28/16, the Bureau of Economic Analysis revised 1st quarter 2016 GDP (gross domestic product) for the US up to 1.1% from previous level of 0.8%. Yes 1.1% is pretty low, but it was a 37% increase from earlier estimates. Also today, the Conference Board reported US consumer confidence for June 2016 rose to 98, up from 92.4 in May 2016, and the highest level since October 2015. While not every economic report in the US is as positive, in the aggregate the US economy is stable.
While the stock market (basis S&P 500) declined 5.35% from the close on 6/23/16 through the close on 6/27/16, this decline is nowhere near the declines we experienced in August and October 2015 and again in January/February this year.
Do I think the Brexit situation is behind us – not hardly. The point of this update is to let you know that the situation in Europe is not going to cause a global catastrophe.
I find this quote to the point: “Capitalism is a resilient and flexible organism and companies adapt quickly to new circumstances. This is why economies usually muddle through crises even in the absence of good leadership.” -Steve Bates of Guardian Capital
Sources: Yahoo Finance, Raymond James & Associates