By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
There has been much media coverage in the past several weeks regarding the vote by UK citizens to separate from the European Union. This issue is a mater of complexity surrounding political, economic, international trade, social and military defense issues which will probably take some time to unfold and resolve. We are very much engaged in a global economy in which many participants will experience positive or negative impacts from actions taken by them regarding this issue along with the new relationships to be established between the UK and the EU. It is important to recognize that the EU as a combined economic unit including the UK, was the second largest global economy when measured by GDP just behind the US and just ahead of China and Japan. It is clear that the UK separation will change that status perhaps giving China a bit more influence with the International Monetary Fund regarding their currency when considered in the major currency basket at IMF which includes the dollar, euro, pound and the yen. The renegotiation of trade and defense treaties will involve many global players also. Challenges to global central banks will be significant since they develop policy matters based on clear visions of economic and development prospects. We are in a time of uncertainty and lower levels of confidence regarding many economic and social issues. Central Banks are clearly engaged in a Keynesian style stimulus program to bring economies out of a slump in the economic cycle. The US Federal Reserve and the Central Banks in Europe, Japan and China are printing currency in order to stimulate consumption and fend off deflationary trends. It will be interesting to see whether cyclical fix strategies will persist or that new foundation economic system principals will be employed. We are all aware of the government debt situations in the US, Japan, Greece, Italy, Portugal, France, Brazil, Argentina, Australia, Venezuela and Russia etc. . So what next and who knows? I am concerned about the future of fixed income markets with the low interest yields offered at this time. Many yields are negative due to negative interest rates or are so low that net of inflation they are negative. Equity markets are clearly benfiting from low interest rates since investors need to look at the equity market favorably in spite of the usual higher risk due to volatility when comparing returns to those with bonds and other cash equivalents.
All of the issues address will be resolved in time. I suggest that those who are engaged in building assets and wealth use a strategy as follows:
- adapt a long term strategy
- be tax efficient
- avoid excessive fees regarding investments and transaction costs
- engage in fundamental analysis
- be suspect of all you see, hear and read in the media– do adequate investigation
- seek credible and quality guidance.
For The Record:
DJIA 18,372.12
NASDAQ 5,005.73
S & P 500 2,152.43
Suggested Reading “Currency Wars” By James Rickards
Leonesmoneymonitormonthly's Blog 
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