Last week, the citizens of the United Kingdom voted to exit the European Union (EU). While it had been hotly debated in the weeks prior to the vote, it was generally thought that the vote would be to remain a part of the EU. The markets were caught a bit off guard when the vote to exit prevailed.
As a result, worldwide markets sold off heavily Friday and again on Monday. The results were as follows:
S&P500 (ETF:SPY) -5.3%
NASDAQ (ETF:QQQ) -6.0%
Dow Jones 30(ETF:DIA) -4.79%
London FTSE -5.6%
Greece (ETF:GREK) -22.7%
France (ETF:EWQ) -13.4%
Italy (ETF:EWI) -17.4%
Spain (ETF:EWP) -16.3%
The long and short of it is that in two days of trading, the markets gave up some 3 trillion dollars in value.
On the other hand, the Coastal account models suffered only minor drawdowns. Most accounts have High Yield Muni bonds which were up over the two day Brexit crisis. Some of the other holdings include High Yield Corporate bonds which were down slightly. The net effect was that the account models are basically flat for the month giving up less than 1% over the two market days.
As of this morning, the futures market is pointing to a positive open. Whether this is the end of the sell off or just the beginning of a broad based decline is yet to be determined. We will almost certainly see increased volatility over the coming weeks. As always, I will continue to monitor the markets and make necessary changes to portfolios if the selling pressure resumes.
Thank you for your continued trust and confidence.
