CURRENT COMMENTARY

As we head into the Easter weekend, with Good Friday tomorrow closing the markets, we’ve seen some encouraging market action. What will henceforth be known as the “Coronavirus Bear Market” has really tested investors in ways never really seen. But, while this virus continues to spread globally, and the economic damage it will ultimately wreak is not even fully revealed, there is reason for optimism. The market’s recent bottom occurred on March 23. Over the last couple weeks, we’ve seen our normal new confirmed uptrend pattern: a reversal day accompanied later by a follow-through day whereby large institutional investors poured money into the markets with heavy volume. This follow-through day was on day eight of the attempted rally, and the usual pattern is for that to occur between the fourth and seventh day, but there is plenty of precedence for successful later follow-through days. And since then, market action and chart behavior has improved further. This does not guarantee the current uptrend will continue, but each day that new gains are posted gets us farther away from that bottom, rendering it less likely that low will be undercut and kill the rally. That’s the dry but positive technical picture.

On the human side, just as we expected, this disease’s infection tally has been increasing, and will continue to do so. This stands to reason as we have not yet seen the peak and more comprehensive testing is leading to more infections being identified and therefore counted. And, along with increased infections has come, and will continue to come, more unfortunate deaths. The bright side of this are the reports of the pace slowing and pressure relieving somewhat on medical facilities and staff. At this moment, it appears the United States will escape the fate of some other countries’ healthcare systems, which have been overwhelmed. Our care centers are being monumentally stressed, for sure, but not swamped. At least not so far. For the reasons we’ve previously stated, expect our nation to lead the world in cases, and ultimately deaths. At least as to what’s officially reported. Recent stories validate our suspicion that China’s cases were vastly under-reported. But no matter how we analyze it, this has been a human catastrophe.

It’s quite possible that as this virus runs its course, the total tally of infections and deaths will be in line with that of other flu-like illnesses that occur continually. What makes this different are the economic effects of efforts to halt the transmission of the disease. The official narrative is rightly shifting to focusing on getting this economy and its workforce back on the job. This is what the financial markets are sorting out and reacting to now. If the nascent leveling off of cases continues as expected and we start to incrementally re-open businesses, we can presume a resumption of some semblance of normalcy in mere weeks, not several months. Completion of the process will take months, for sure, but progress toward full growth should commence soon. While a second wave or relapse might occur, promising news on a daily basis seems to argue against that for now. We’ve put new cash into the market over the last couple weeks, and will closely watch what comes about in the near future.

Leave a comment

CURRENT COMMENTARY

The correction we are now in has cascaded into a full-blown bear market as of yesterday’s decline. Technical action during the day, especially leading into the close, had the earmarks of a capitulation day, whereby fear crescendos, holdouts finally have had enough and throw in the towel, and very few sellers are left in the market. Whether or not that turns out to be the case, and today’s early market-open stabilization forms a bottom, remains to be seen. However, the action of the last few weeks has been that of classic panic selling. That is always difficult to assess along the way because it isn’t based on sober analysis and rational thinking. It’s emotional and fear-based and therefore impossible to quantify.

The media are in the business of creating sensational, attention-grabbing headlines and talking points. This doesn’t help in sifting through the actual facts to make informed decisions. Some of what is said is just plain false. The press widely reported last week that President Trump characterized the coronavirus as a hoax. This was done to present the notion that he appeared cavalier, unconcerned and lacking in leadership. But that’s not what he said. What he said was the criticism of his administration over this issue was a hoax. It can be left up to each individual to determine if that mischaracterization was intentional. Other media reports are merely misleading. Just today, the Wall Street Journal’s front-page headline reads, “Virus Batters Economy”. But that remains to be seen. Yesterday, the virus battered the markets. The markets are an estimated reflection of the future of the economy. But they are not the economy. But it’s scarier to claim the economy is being battered. Further, we have to look deep and far to find news that puts this into perspective. For example, it is not widely reported, but can be discovered, that nearly 70% of all the cumulatively-infected people worldwide have already recovered. They are back to the level of health they had before they contracted the virus, or if they’d never have gotten it. We don’t want to appear callous, but let’s also remember that just in America alone, every year, about 29 million people get the flu and on average between 30,000 and 70,000 die of it. That doesn’t tank the markets and send people running to the store to clear out shelves. And the vast majority of casualties have been among the old and already weak, not the general population. Globally, since this outbreak started in China several months ago, about 138,000 have been infected, and a little over 5,000 have resulted in deaths. Already, the pace of new infections is declining in most areas, due to measures being taken to prevent exposure. As we move into warmer months in the northern hemisphere, people will be opening windows and flushing stale air out of buildings, and spending more time outside where the atmosphere dissipates concentrations of germs. This is not to say we shouldn’t take reasonable precautions, or dismiss the disease entirely. But let’s not lose our heads. How many months’ supply of toilet paper do you really need? Is Advanced Micro Devices really worth only 60% of what it was three weeks ago?

To be sure, there is no doubt there will be deleterious effects on the global economy, and this has not fully yet run its course. Certain sectors like travel, leisure, conventions, sports, and retail will take hits. Other sectors of the economy will weather the storm more successfully. But this will blow over, and likely sooner than many think. We can expect the total infection and death count to rise all the way up until this is over. So don’t be surprised to read that. But as the rate continues to level off, this will not afford us any new news we can’t already anticipate. Markets will start pricing in the calculation of the actual economic damage and its expected duration and it will very likely reveal this panic selling to be overdone, and recalibration to the upside may well be quite swift. Warren Buffet has warned that the market is a mechanism for transferring wealth from the impatient to the patient. Let’s be the beneficiaries of patience.

In times like this, and we’ve seen plenty of them over the decades, it helps to keep in mind what really drives long-term market trends. Those factors are economic fundamentals which impact corporate earnings, and therefore the value of companies. That’s what stock prices reflect. Let’s review where that stood before this correction started, because they are still in place. Economic growth was accelerating. The labor market is the best it’s been in over 50 years, and just a week ago non-farm payrolls, which were expected to rise 177,000, instead came in at 273,000, and the previous two months’ job gains were revised up a total of 85,000. Inflation is non-existent. Interest rates are more than just accommodative, and are loosening further. The other cloud over the economy, trade battles, have been dissipated. Corporate earnings were on the rise. The point is, prior to the Covid-19 coronavirus spreading across the globe, the American economy was in an uptrend. It is well positioned to withstand this shock. Since then, the government has announced a series of policies to provide assistance to the most highly-impacted among us. The Federal Reserve has injected an additional $1.5 trillion of liquidity into the economy. Last week they lowered the Fed Funds rate 50 basis points, and they’ll likely loosen more next week. We actually think this will not do any good because lower interest rates will not create a vaccine. Economic activity is not contracting because borrowing costs are too high. It’s happening because people are self-quarantining to halt the virus’ spread. Still, lowering rates may provide a bit of a positive psychological boost, which should not be discounted, as we’ve seen the negative psychology of this pandemic become un-moored from reason. Our hope is that the Fed has the discipline and presence of mind to walk back these rate movements when the anxiety subsides.

Already, we’re seeing previously-shuttered factories, manufacturing facilities, and businesses in China reopen – even in Wuhan. This will also happen in South Korea, Italy, and other hard-hit countries. The incubation period for the virus has been revealed to be about five days, not the two weeks previously thought, and the illness period runs a couple weeks. So, with the quarantining measures being taken, which are lowering infection rates, we will soon see this thing die down. The decline in economic activity has, and will continue to, deplete inventories. Those inventories will have to be replenished, and pent-up demand will drive a new wave of growth. We don’t know when that will start, but we do know it will happen. The market will recover from this and go on to new highs. It always has. Just a year and a half ago, the fourth quarter of 2018 looked pretty bleak. But 2019 was a stellar year, and just a month ago, all the major indexes were at all-time highs. This will happen again. Down the road, when viewed in the rear-view mirror, this will be known as a great buying opportunity for those with fresh cash to deploy. This is why many of our clients are making substantial deposits to their portfolios. But even if we can’t come up with new cash, not selling near a bottom is wise. That will pay off.

Leave a comment

CURRENT COMMENTARY

It’s been a rough week-and-a-half for investors, that’s for sure. Most of what makes this correction so unnerving is its pace. This is the fastest decline into correction from a market high in history. In just six trading days, the NASDAQ lost over 12% and the S&P 500 over 10%. Both of those indexes hit all-time highs the day before the first decline. Usually, corrections of this depth take weeks to build up. This, in an of itself, is a bit of a small bright spot. The reason is that almost exclusively, bear markets – the really nasty, deep, long-lasting declines – begin very gradually. Corrections that go on to recover more quickly tend to be more violent and dramatic in their early declines, such as this has been. Of course, there is no guarantee that previous patterns will never be violated, but when we’re assessing damage in an effort to determine a course of action from the current point, relying on steady patterns of previous market behavior is helpful. History repeats itself with regard to market action.

Whenever health-related issues, such as this coronavirus outbreak, become prominent news, that too is unsettling. It doesn’t help that the media has fixated on sometimes hysterical and incorrect reporting. We guess that sells newspapers and website hits, but it doesn’t inform us properly. We saw one headline earlier this week, which stated in percentage terms, that day’s 4.4% loss was the greatest in history. That’s blatantly false. In October of 1987 the DJIA lost 508 points, but back then, that was 22.8% in one day! We did have history’s greatest DJIA point loss Monday, but that was only the 229th largest percentage loss recorded. That was edged out very slightly for the top spot yesterday. So, not as dramatic, but certainly sensational! We’re not trying to minimize this rout, but let’s be clear: we will always and forever have increasingly-more dramatic point movements – both directions – on big action days simply because the indexes have gone up so much. And, as our portfolios rise, we will always and forever have greater dollar swings as well, for the same reason. It’s the percentages that matter, especially when comparing to historical movements.

So where do we go from here? We’re maintaining that staying put, and not selling into this weakness, will reward patient investors. Nothing has been reported negatively about the economy itself to alter our assessment of strong underlying fundamentals. The VIX volatility gauge has surged more than 20% above its 10-day moving average, and is more than 68% above its 10-day line, indicating the fear in this stock market is severe. The put-call volume ratio hit 1.21, above the key 1.15 level for the first time since early October. A reading above 1.15 can help confirm a low in the S&P 500 and Nasdaq. This market has gotten oversold on fear. Keep in mind the VIX and the put-call ratio are secondary indicators, and don’t take precedence over the price and volume action of the indexes. But they indicate extreme fear and panic selling. And, they’ve been quite accurate in finding bottoms. We don’t know how much lower this will go, or how long it will be before a new uptrend resumes. But over the decades we’ve been in very similar situations many times, and we’ve proven over and over that keeping cool is an investor’s ally.

While it may seem scary or even crazy, we all know the recipe for investing success is to “buy low and sell high”. This requires that we have the presence of mind and courage to actually invest when markets are low. And when are markets low? When bad, scary news has driven them down, that’s when. Our most experienced clients are contacting us about adding to their accounts. Infusions of cash at times like this allows us to practice the above-mentioned strategy. We can’t invest cash we don’t have in client accounts. On the other hand, as our clients well know, we never put new money to work in weak markets with bad technical indicators. We are in a technical correction. We will sit on any new cash until we launch into a new confirmed uptrend. But cash must be on hand then. So, if you’re inclined, now is the time to arrange for deposits into accounts.

Leave a comment

CURRENT COMMENTARY

Yesterday, the market indexes took their biggest hit since December 2018, with broad selling across most sectors. Concerns about the coronavirus outbreak had been reasonably contained until late last week, when reports of more infections spread beyond China. Over the weekend, outbreaks surprised people in Italy and South Korea. Estimates now indicate that the effects of the various efforts to contain the virus could shave $1 trillion off of global GDP. So far, the United States has been little affected by the actual virus itself, but shutdowns in China and elsewhere are disrupting the supply chain, leading to parts shortages, and that is hampering production. That’s the bad news.

The good news, is the otherwise underlying fundamentals of our domestic economy are quite healthy. Growth remains solid and is improving. Trade barriers are dropping. Wage gains are rising nicely as a by-product of one of the tightest labor markets in half a century. Corporate earnings are coming in ahead of expectations, and productivity continues to increase. Recent market weakness, just days after achieving all-time highs, and prospects for global growth slowing, will only add pressure for the Fed to maintain, or even reduce, interest rates. Inflation is well under control. These are the factors that drive the markets over the longer trends. And this is what we’re focused on as long-term investors. International markets have borne the brunt of this decline, and we are purposely under-weighted in foreign positions.

Another development came to light over the weekend as well, and while it hasn’t been included in news analysis of yesterday’s market activity, we’d suggest it combines with the coronavirus developments to add fuel to the fire, and made yesterday’s decline worse than it otherwise would have been. That development is the strong finish Bernie Sanders made in the Nevada caucus. It appears a self-proclaimed socialist will very likely secure the Democratic party nomination and go up against President Trump in November. Free markets, which are all about property rights – and your investment holdings are your property – do not like the prospect of wealth confiscation and expanded government control over the economy. That lowers the value of all property, including the stock of corporations. One week from today is Super Tuesday, and that will likely define the outcome of that race.

Some sort of pullback was likely to occur in the near term anyway, as the last year of gains have been blistering, and some profit taking is in order. Specifically, the market has posted more than an average year’s worth of gains just since October. These negative developments provided a catalyst for reversal. Today’s market action appears to be a latent follow-up, with continued sliding. Volatility measures and bearish sentiments are rising, which are historically contrarian indicators of market bottoms. Whether or not indexes are nearing a bottom remains to be seen, but we see holding positions, and not selling into weakness, as the prudent choice at this time.

Leave a comment

Current Commentary

It’s de ja vu all over again, as Yogi Berra might have said. Late last year the markets concerned themselves with the health of the economy in the face of two policy issues: interest rates and trade wars. Here we are again. But much like our assessment at that time when it started almost a year ago, we are focusing on the underlying fundamentals. To be sure, these policies are very important and have the potential to derail the aging economic expansion. They should be taken seriously and we are doing so. At the same time, we are still enjoying a pretty strong economy with historically low unemployment and tight labor conditions, increasing wages, improving productivity, and better-than-expected second quarter preliminary GDP gains. As an aside, do you ever wonder why every economic report is characterized as “better than expected”, or “worse than expected”? You’d think these economists would start getting better at their expectations! In any event, the 2.1% GDP gains, while exhibiting some slowing from the previous growth pace, beat consensus analysts’ 1.9% projection. And, to top it all off, quarterly earnings reports have been surprising to the upside significantly. In other words, while the trade and interest rate issues do bear watching, the economy is doing quite well, and that’s what really drives long-term stock direction, along with subdued inflation and accommodating borrowing costs – something we are enjoying on both those fronts.

The investing class was disappointed mid last week when the Federal Reserve announced only a quarter-point easing, but more tellingly it telegraphed no urgency to keep that going. Interest rate watchers were hoping for about half a point and some guidance regarding further declines. They didn’t get it. The markets started drifting down as a result. Then, late last week, President Trump announced additional 10% tariffs on another $300 billion of Chinese imports. Today’s reaction to that, after having digested it over the weekend, is decidedly negative. The one bright spot in all this, is that last week’s declines came in lighter volume, indicating no real appetite for dumping stocks among professional money managers.

As with the 2018 fourth quarter declines, we expect a bit of continued sliding and some kind of catalyst to reverse course. Perhaps it will be the Fed making some sort of musing about “re-assessing conditions”, as they did last Christmas Eve. Who knows? But what we don’t want to do is sell into steep declines when underlying fundamentals are strong. The weakening global economies are of concern, but the domestic economy is holding up nicely. If we were seeing data points indicating an impending recession, that would be one thing. But we’re not at this point.

The question is, how long in the face of slowing non-US economies and continued world trade burdened by tariffs, can the American consumer keep corporate earnings rising?

Leave a comment

RECENT MARKET VOLATILITY

The last few weeks have seen a dramatic level of fluctuation in the stock market indexes. Speculation is rife as to the causes, but it’s safe to conclude a few things about this. First, it’s been an exceptionally long time since a significant sell-off of any lasting value has occurred prior to the first quarter of this year. Investors will recall that after the trade tariff rounds started in the early part of this year, the market regained its composure and went on to post strong gains, leading indexes to new highs just weeks ago. This current round of volatility seems to be centered on increased fears of the Federal Reserve raising rates too quickly and slowing down the economy too abruptly. And, while a trade deal with Canada and Mexico was codified, lingering trade fights with China don’t seem to be getting resolved. Also, of course, mid-term elections are causing anxiety because the current strong economic and employment performance is predicated on continuation of recent policy changes. If the Democrats take over control of Congress, concerns are legitimate that the economy will suffer again, and revert not just to the slow growth of the previous decade, but an actual recession. On the other hand, bills won’t become law if the president vetoes them. We’ll know about that outcome in a week.

But this sell-off, punctuated with recovery days, doesn’t appear to be the start of a nasty bear market. Analysis of the last 65 years of the S&P500 and the past 27 years of the MSCI All Country World markets done by Morgan Stanley, indicates sharp, initial declines are more consistent with run-of-the-mill corrections, not a slide into bear markets. And this has definitely been sharp, with the NASDAQ dropping about 13% and the S&P500 about 10% just this month. It’s scary, but not unusual. In contrast, when bear markets begin, it is with deceptively gentle declines, making it hard to discern what’s going on. Judging from history, this looks like a correction. In the ten largest 35-day selloffs, stocks ended up bouncing back in nine cases. Only one eventually turned into a bear market. The current decline ranks seventh of those ten. Our last bear market in 2007 didn’t even look like this, with no dramatic early plunges. But bear markets come along with recessions. We just received the 3Q GDP report last week, showing the economy continuing to steam along at a 3.6% rate. Unemployment remains at multi-decade lows. This is not an economy sliding into recession. For sure, eventually we will have another bear market and appropriate changes to portfolios will need to be made. At this point, this doesn’t appear to be happening now.

Bull markets don’t die of exhaustion – they die of harmful policy inputs. The smart money rides through most corrections – and this is definitely a correction – as most of them are relatively shallow and short-lived. The key for a long-term investor is to stay put and be invested when the next uptrend starts. It will come without warning and when least expected. If the slide continues to gain steam, we’ll appropriately defend portfolios.

Leave a comment

Current Commentary

Last week’s market slide has been a long time coming. It’s been a couple years since we’ve seen a correction within what is now this 9-year-old bull market. We’ve been getting concerned about the unabated strong run-up lately. Markets periodically need to pause and digest gains in order to stay healthy and keep overall risk for the trend at reasonable levels. Last week, the Dow Jones Industrial Average shed 4.1%, with a one-day 666-point drop coming on Friday. Other indexes were off a little less. While large numerical movements like this can seem concerning, the percentages are what needs to be focused on, and that translates to 2.5%. Long-time investors may recall the market crash of October 1987, when the DJIA fell 508 points. But back then, that represented over 22%! The point is, with an index around 26,000, it takes large point movements to make impacts of some percentage.

Our concern has been complacency. Many have gotten so used to weekly gains that they’ve forgotten about normal levels of volatility. In fact, the last time the technical indicators were listed as remotely cautionary was last August. The catalyst for Friday’s action was ironic: too strong economic data. Year-over-year wage growth was up a healthy 2.9%. Wage growth was one of the many missing components to the lackluster “recovery” from 2009-16. But the concern among market watchers is that this could lead to inflation, which in turn would spur the Fed to raise overnight fund interest rates even faster than they plan to. That drove up the 10-year Treasury yield to 2.852%, creating a bond market selloff. This may or may not be overblown. While Keynesian theory holds that higher earnings are inflationary, that notion discounts productivity gains and myriad other factors and there is scant data supporting this conclusion. But, that fear has some warrant to it since our policy makers buy into this theory, and therefore have a history of acting on it.

However, it bears keeping in mind the big picture. Last week’s collective decline is in the 4% range from peak – not at all worrisome and as we mention above, overdue and in our view welcome. In fact, we’d like to see this pull back at least 5% or more to shake out some fear and build caution. Today, the losses are less, but helping to get there. Also, recent economic data show the nation’s growth rate in the 3% range, which is double the rate over the aforementioned “recovery” period. Globally, the world’s major economies are in sync, which is unusual but positive. Additionally, unemployment is at low levels and most important in this area is labor force participation, which has been climbing out of the doldrums. Recent actions slashing wasteful and burdensome regulations and the brand-new stimulus affects of the just-passed tax reform package are already evident and will keep things moving along nicely. Stock prices are driven by corporate earnings, interest rates, and inflation. The Fed has been concerned of late that inflation has long been stuck well below its target level of 2% (deflation is a major problem, so some level of inflation is necessary). Maybe now, that target will be achieved. Interest rates are rising, but not to dangerous levels and are still quite accommodative for financing growth. And, corporate earnings are being reported as quite strong and will likely strengthen further with more people working and getting paid more, thereby investing and buying goods and services with those proceeds, creating demand.

In short, while we’re always on alert for significant market declines that may warrant protective strategies, the smart money holds steady in most declines since they are usually short-lived and shallow and knowing the start and end of them in advance is impossible. Missing the rebound is more likely to hurt long-term performance than help. So, we welcome this pullback, but will keep an eye on it to make sure we weather it successfully.

Leave a comment

Current Commentary

Global markets are reacting negatively to the results of Britain’s “Brexit” vote to pull out of the European Union. This came as a shock to the collective analysis around the world. We supported the exit, but expected the “remain” side to prevail just as virtually all others did. In fact most markets, including in the United States, actually rallied the day of the vote in anticipation of the “remain” side winning the referendum. British book makers placed the odds of Brexit failing at 9:1, so those guys are certainly licking some deep wounds now! As with most events where the effects of the resulting outcome are uncertain, over-reaction and panic drive markets initially. If there’s one thing financial markets hate – even more than bad news – it’s uncertainty. Bad news can be priced in allowing you to move on. But what do you do with the unknown? And, admittedly, with political, market, and economic uncertainty globally so heightened, this timing wasn’t ideal.

The first trading day after results were published wasn’t pretty. Asian and European bourses took hits ranging from around 6% to over 12%. Interestingly, the one country most affected by this, the United Kingdom, sold off the least. Our own markets open much later, but by the closing bell on Friday the S&P 500 had shed 3.6% and the NASDAQ declined 4.1%. The Japanese Yen and American dollar were the only major currencies to increase in value amid steep declines in other countries’ exchange rates, as a result of a flight to safety. More losses followed today, notably for our portfolios which have very little foreign exposure (thankfully, but by design), the S&P posted an additional decline of 1.8%. So that’s what’s happened so far. But what can be made of this going forward?

Our view is the doom-and-gloom prognostications are overblown for a number of reasons. It appears the main concern regards trade deals amongst the now-27-member EU and the UK, and other trading partners of the UK as well, like us. The fact is, the British economy is the second-largest in Europe and by some measures, it is in the best shape. The global community that trades with them now will want to continue to do so, and they will also want to continue trading with their partners. So trade deals will be made, and on terms likely not much different from those in place now, lest further restrictions reduce trading volume for both sides. Since the beginning the UK has maintained its use of the pound sterling, eschewing the euro as a currency. So nothing different there. The UK had already negotiated with the EU for more control of cross-border movement prior to this. So that’s little changed, but whatever changes on this front are in store, it should be better for Britain. And let’s not forget that the exiting provision of the EU agreement – article 50 – has flexibility as to when it’s invoked and only then does that start date commence the clock ticking for two years to accomplish the transition to complete removal. The EU itself has announced it is in no hurry for that invocation to start and has suggested it should be done by the next prime minister. David Cameron has announced he will step down in October, so they won’t even have a new government for a few months to even start the two-year process. So, there is plenty of time to hash out agreements and transition protocols. By then, President Obama, who crudely inserted himself in the British citizenry’s internal decision by threatening to move them “to the end of the queue” for trade deals with us, will not be the one leading our own negotiations with them, which is a positive.

To be perfectly honest, having analyzed European economics and politics for decades, we’re surprised it took this long for chinks to appear in the armor. Europeans are a wonderful but very diverse group, and for centuries haven’t really gotten along all that well. The divide between north and south, as well as east and west, has always been wide. The idea of fusing them all together forcibly, to be governed by a collection of rotating non-elected bureaucrats out of Belgium, who have made a slew of oppressive rules and regulations, bonding their finances together forcing the taxpayers of the more responsible wealthier nations to bail out the petulant profligacy of the economically-weaker more socialist nations, with each country enduring exploding welfare expenses, adding open-border policies that are now stressing the cultures of the individual nations to the brink especially with the influx of middle-eastern refugees and terrorists from a culture diametrically opposed to pluralistic western civilization, and all the while creating a weaker defense alliance as each nation thinks all the others will come to their defense so no one spends anything themselves on it, and expecting all of that to work indefinitely is really pretty unrealistic. We Americans wouldn’t want to live in an alliance like that, so it shouldn’t be hard to understand Europeans re-thinking this now that they’ve endured it for a while. We expect other nations will start to grumble about the union too.

Let’s also keep in mind that some European nations have never been part of this union and it hasn’t hurt them any. Norway and Switzerland have been sovereign all along and were never part of this system. Other countries, like Denmark, have maintained their own currency along side of using the euro, allowing them certain exemptions. Our opinion is that this is a good thing, certainly for Britain but also for the rest of Europe, even though it will cause some early pain. The citizens of mainly-free democratic countries need to control their governance by elected representation without interference. Free people need to chart their own destiny, not have it dictated to them, and be able to maintain their own unique cultural distinction. This applies to both political and economic liberty. We have every confidence the great people of the United Kingdom will prosper, and those of us who remain their allies will do just fine as well. It will take some time to bring equilibrium back to the world financial markets, but perhaps not even as much time as many fear. We will watch developments closely, but maintain our heads while those around us are losing theirs.

Leave a comment