Investment Insights Podcast – Prospects and Possibilities of Brexit

Stuart Quint, Investment Insights PodcastStuart P. Quint, CFA, Senior Investment Manager & International Strategist

On this week’s podcast (recorded March 1, 2016), Stuart takes to the mic to discuss what the impact could look like should Britain exit the European Union (EU).

Quick takes:

  • On June 23, the United Kingdom (UK) will hold a referendum on whether to remain or exit the EU.
  • The consensus leans towards the UK staying put, but polls in recent general elections were wrong.
  • The UK has more to lose from “Brexit” than the EU, but it could also highlight other cracks in Europe.

Markets have reacted by selling off UK markets, particularly the British pound, in light of the impending uncertainty and potential adverse impact of a “yes” for Brexit. So what potential impact could there be for the UK?

  • Direct trade – the EU accounts for roughly half of UK imports and exports; potentially three million jobs at stake¹.
  • Scottish independence – Scotland is more sympathetic to the EU and could seek another referendum for their independence from Britain; they currently make up roughly 40% of UK’s GDP.
  • Multinational headquarters – could start vacating out of London; banking sector could reduce operations in UK and uproot to Frankfort or Paris, as well as Asia.

What’s the potential impact to the EU?

  • Trade – while not as impactful, a UK departure is still negative especially with tepid economic growth in Europe
  • Political risks – France elections in 2017 could see more impetus to opposition party of Marine Le Pen, which is of an anti-Europe mindset; Catalonian desire to secede from Spain could be rekindled
  • Economics – Europe’s focus on broader economic and national security issues could become complicated

Please click here to listen to the full recording

[1] Webb, Dominic and Matthew Keep, In brief: UK-EU economic relations (Briefing Paper Number 06091, House of Commons Library), 19 January 2016, page 3 accessed on www.parliament.uk/commons-library on March 1, 2016.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, a Registered Investment Advisor.

Investment Insights Podcast – Here Comes the Renminbi

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded November 20, 2015), we focus on the likelihood that the International Monetary Fund (IMF) will add the Renminbi (RMB) as an approved currency in its Special Drawing Rights (SDR) basket. Will this displace the U.S. dollar as the world’s reserve currency?

What we like: We don’t believe the RMB will supplant the dollar as the favored reserve currency, at least not anytime soon; law and precedent in our judicial system is more structured and supportive–not the case in China; debt markets aren’t well-developed in China; Chinese don’t necessarily want the RMB to be a much stronger currency relative to the U.S. dollar as it would impact their ability to export; approval would likely lead to more reform in China, which would add to global stability

What we don’t like: This won’t necessarily solve China’s current growth problems; would likely have some type of ripple effect (Australian dollar)

What we’re doing about it: Standing pat; announcement may come soon, but would not take shape for another year or so; no need to rush into portfolio changes; not a major concern to the U.S. dollar at this time

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.