Markets experienced significant turbulence after a surprise referendum result leading to the departure of the United Kingdom from the European Union. The S&P volatility index approached year-to-date highs, with the banking sector getting hit hard by the subsequent sell-off. JPMorgan Chase & Co. (JPM:NYSE) closed down -6.95% on Friday to $59.60 following the initial shock of the vote. After Monday’s reopening, shares continued to tumble, sliding another -3.34% to $57.61.

While there is no doubt that the Brexit result is a problem for bank stocks in the short-term, it will not actually materially change the short-term structure of companies with operations in the UK. In a letter to clients, JPMorgan CEO Jamie Dimon said, “the framework of the UK’s engagement with the EU, including trade agreements, will be negotiated over a period of years. For the moment, we will continue to serve our clients as usual, and our operating model in the UK remains the same.”

Macroeconomic Give and Take

There is little doubt from economists that the UK decision to leave the EU will have an adverse economic effect. Imposing barriers to trade will likely further restrict a world economy growing at just 3.10% and reduce growth in the Euro Area, which has already imposed negative rates in an effort to stimulate anemic economic growth.Both the British Pound and the Euro, two of the most important currencies in the world, weakened against the dollar immediately after the referendum. A rising US dollar makes American goods more expensive to export, which is contractionary for the economy.

However, impending world economic uncertainty drastically reduces the likelihood of the Federal Reserve raising interest rates. Higher interest rates are contractionary, so delaying a rate hike, and even potentially cutting rates, may even out currency moves.The day after the Brexit vote, even the tiniest likelihood of an interest rate hike got pushed back to December of this year, but most likely the Fed will hold off until 2017. The Implied odds from futures pricing showed the probability of an interest rate cut running from 0.00% to as high as 14.00% in November in an effort to stimulate the US economy.

Increased Trading Volumes

With low trading volumes hurting the banking sector’s bottom line, forcing thousands of traders out of work, an injection of volatility is actually greatly appreciated by banks. First quarter fixed-income trade revenue fell -13.4% to $3.60 billion for JPMorgan. However, in the wake of the vote, Dimon addressed his employees the night before the vote, remarking, “we expect to do three times the normal daily volume today.”

Dimon was proved to be correct, stating, “we remained totally open and accessible on e-trading channels overnight and processed 1,000 trading tickets per second at one point,” after the vote. The firm saw record highs in their currency trading business. JPMorgan traded over $60.0 billion in tickets on its foreign-exchange platform in Asia alone, more than four times what it normally trades. The effect of the leave vote will have a demonstrable impact on JPMorgan’s bottom line as ripple effect improves both second and third quarter earnings releases.

Above Average Capital Reserves

JPMorgan will benefit from turbulent times relative to other bank by having relatively high capital reserves to mitigate global economic risks. The day of the referendum JPMorgan announced positive results from its Dodd-Frank mandated stress test. The test measures bank’s ability to get through a recession similar to the one seen in 2008. Under the test conditions, JPMorgan exceeded the Fed’s 4.50% minimum high-quality capital as a share of risk-weighted assets ratio, coming in at an impressive 8.30%. The bank’s measure of high-quality capital as a percent of all assets was 6.20%, substantially stronger than the 4.00% minimum. JPMorgan’s test results prove that it is structurally very capable of handling an adverse economic situation such as a worsening outlook for the UK and EU.

Shifting Operations Overblown

The downside of restructuring European operations has been overblown by recenct bias hysteria. In a pre-vote warning, Jamie Dimon suggested that leaving the European Union could result in JPMorgan moving as many as 4,000 jobs out of the UK. Though still possible, investment bank boss Daniel Pinto who oversees 16,000 staff in Britain thinks that he can figure out a way to deal with specifics and keep most of the unit intact.

The company estimates that personal movement may be as low as 1,000 employees, especially since experts predict that leaving the EU could take as long as 10 years to complete this extremely complicated and unprecedented move. Pinto told the Financial Times, “we will not start moving people until we have clarity on what we will be allowed to do from the UK once the negotiations [on the terms of Britain’s exit from the EU] start to take shape.”

What it All Means

JPMorgan’s strong stress tests results are indicative of a post-great recession banking sector. The bank is equipped to handle turmoil much more severe than the Brexit event that could play out over a decade or more. US economic conditions will not have the short-term economic collapse markets are implying. In fact, the Fed could continue raising rates as early as the end of the year, great news for the financial sector which depends on interest income.

As for the shares, though a near 7.00% one-day stock drop seems like a big deal, historically it is not. According to an analysis conducted by the Motley Fool, in the last 16 years, JPMorgan Chase’s shares have dropped by a bigger percentage on 41 trading days. Granted many were during the financial recession, the largest was a -33.7% plunge on June 12, 2000. That was one of eight drops during 2000-2002 bigger than the one shares realized on Friday. In fact, as a result of the volatility, the bank will actually see much stronger trading volume, helping to improve trading profitability which has been soft. JPM stock has nearly tripled since its 2009 low, meaning the stock should have no trouble bouncing back from this dip and continuing its upwards trajectory over the medium-term.