Written by Mark Kerzner, President, TMG The Mortgage Group
For the last few weeks we have been seeing flashes of news stories on the upcoming BREXIT vote, and this morning we have seen the results. Britain has voted by a narrow margin to withdraw its participation in the European Union (EU).
I have to admit I am a little bit of a political junkie. I often have CNN.com in my background at work and spend my time in the car listening to satellite news radio. And while we (O.K, I) were led to believe that the STAY vote would ultimately prevail, it was the LEAVE momentum that succeeded in the end.
Democracy in action is really a beautiful sight to see. Regardless of what position you had started on, everyone is now bound by the realities and the wishes of the majority. We see this storyline play out time and again. We see it happening in the US presidential election and we bear witness to it at home on a regular basis. Even if you were a staunch Harper supporter in the Fall election, Trudeau is our Prime Minister.
While there are certain elements of nationalism in recent social movements in western democracies there are also elements of xenophobia and demagoguery and those are the things that concern me.
Regardless of how close the polls had this vote, the markets were not anticipating this outcome. I actually was listening to a radio show yesterday afternoon that was quoting the U.K ‘bookies’ estimating this outcome at 20%. Since the markets were expecting a different result, the volatility that we have seen so far today was not to be unexpected.
The British Pound has fallen to a level not seen in 31 years, markets around the world are selling off and commodity prices (with the exception of gold) are falling.
I guess it is a little ironic in some ways that this movement to opt-out of an economic union has reminded us just how much we are all intertwined globally.
The UK amounts to a very small trading partner for Canada. That said, perhaps (just perhaps) this new global economic volatility will lead to a ‘natural’ slowing down of some of our heated housing markets. Perhaps the US Fed will remain on the sidelines a little longer before it starts increasing rates. Perhaps this will in some way help our housing concerns here at home.
At the end of the day though when all is said and done, we will continue to drive forward, our markets will eventually rebound and we will see the market swings subside … that is until the next geo-political item plays out.
