Brexit?!

Dear Reader,

Great Britain decided to exit the European Union. What does this mean for financial assets?

Stocks should suffer only a minor setback. I do not envisage a correction of more than 10% in the US and more than 20% in the eurozone and Asian stock markets.

The UK FTSE should also fall by less than 20%.

Gold should bounce up by 10-15%. In the long run, however, gold is overvalued, I think, and it should correct to 1050 USD in the next 1-2 years.

German 10 year government bonds(bunds) should reverse the fall of yields from the Brexit results day and the bunds yield should again become positive and target 0.30%.

The eurozone periphery(Italy, Spain, Ireland, Portugal, Greece) government bonds's yields should rise by a lot - 1% from current levels.

Basically, the Brexit dip in US stock markets should prove a good opportunity to buy. US stocks do not seem to me to be overvalued.

The eurozone stock markets should have difficulty to recover after the Brexit. The weight of the European Union diminishes after the Brexit.


The Brexit, actually, could prove beneficial for the UK in the long run. The UK could become a safe heaven and the inflow of money could support the British pound and Britsh stocks and bonds in the long run 2-3 years. This is provided that, Scotland, Wales and Northern Ireland do not decide to leave Great Britain.


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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!


Kind regards,
Petar Posledovich