May Be Not

Ever since 6 AM this morning, US equity futures have been drifting lower, turning earlier gains into moderate losses. A number of catalysts are behind the weakness. For starters, US-China trade talks show no signs of improvement. Over in the UK, Thersa May’s latest plan for a Brexit deal is falling apart, and her job looks increasingly at risk.  Here at home, there are also a number of negative data points. Qualcomm (QCOM) is sharply lower after a US judge ruled that the company’s business practices violate antitrust violations. Also, Lowe’s, VF Corp (VFC), and Nordstrom’s are all seeing big declines after reporting disappointing earnings.

With the drama surrounding Brexit close to entering its fourth year now, it’s worth taking a look at the performance of UK equities since the initial vote back in June 2003. The chart below shows the performance of the FTSE-100 in dollar adjusted terms since the close on 6/23/16 – the day of the Brexit vote.  Over that nearly three-year period, UK investors who have been long the FTSE are down just under 1% in price terms. While a decline of 1% is considerably better than the 16% decline we saw initially after the vote, essentially UK equities have been dead money for three years.

 

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