Keep Calm and Carry On

Through much up the second quarter, financial markets were shaping up to deliver a solid performance, rising more than 3% since March through early June. Then, despite many likely being hard-pressed to distinguish between the U.K., Britain, Great Britain and England, all eyes turned in that direction to follow the looming "Brexit" vote - the U.K.'s referendum on whether they would remain, or choose to leave, the European Union.

In the days leading up to the referendum, it appeared that the status quo would prevail and global equity market's rose, pricing in the reduced uncertainty of change. This isn't what ultimately happened however, and just like someone shouting "fire" in a crowded theater, panic ensued leading investors to exit first and question later whether there was an actual fire. The reality is, this was a huge decision, but it wasn't as overnight an event as the vote itself.

For years the U.K. has stood at odds with many of the E.U.'s policies, regulations and "union" goals. The fact that the U.K. never relinquished the Pound as their currency was telling that they were only half-in to begin with. As the worlds 5th largest economy (and forecast to surpass Germany at number four), losing its say in global matters such as international trade has no doubt been a challenge; having ceded its representation at the World Trade Organization, for example, to the E.U. and it's 27 other member countries.

For the people of the U.K., we can only speculate, though "identity" appears to have a played a not insignificant role. The E.U., while seeing broadening membership as a means to enhance it's weight in matter such as foreign trade, tends to downplay national identity. For many English, Scots, Welsh and Northern Irish, this likely hasn't gone over too well all these years, particularly given their individual countries economic success versus Europe's.

Ultimately, there are plenty of reasons to make some sense of why the U.K. voted to leave, though it won't be clear for some time as to what leaving actually looks like and, importantly, whether maybe it wasn't a "shout" that might actually help others avoid an actual fire.

It's not often that a decision of this magnitude occurs, and while most all the attention is on the U.K. at the moment, it's just as much a referendum on the functioning of the European Union. Given the prolonged dismal state of the European economies, this event may ultimately serve to make E.U. leaders more aware that the average E.U. "member," and "european" in particular, doesn't actually exist, which makes them really difficult to interact with. Rather, it's a market of countries and their respective people.