FYI: Surprise decision by British electorate to terminate 43-year old-relationship with the
EU is a political shock; risk premiums and the extent to
which consumer and corporate confidence is undermined
is key; but this is not a systemically stressful financial
event nor is it likely to catalyze a global recession on its
own; the UK has to negotiate its way out, which can
potentially take two years or longer; meanwhile, path
forward depends on currency volatility, policy decisions
and political maneuvering in the rest of Europe and the
world, especially around fiscal policy. Long-term
investors should consider exercising patience, allowing
the dust to clear while investors with short-time horizons
and wealth-preservation needs may use rallies to lighten
positions in non-US assets. Credit markets may provide
better risk-reward trade-offs in the short term while in the
long run, equities could be the outperformers due to
generationally low valuations.
Regards,
Ted
http://www.morganstanleyfa.com/public/projectfiles/gicweekly.pdf
