“Surprise, surprise, surprise.”
- Gomer Pyle (1962-1969); Character played by Jim Nabors in The Andy Griffith Show  

Surprise indeed.  The same group of experts that missed BREXIT were right back at it on Tuesday, November 8, 2016.  This note will focus on the financial markets heading into the election, how we were postured, how the markets responded, and potential changes in our strategies. 

Glass shattered, in slow motion, when Ella Fitzgerald reached a sufficiently high note during a 1971 television commercial. Her recorded voice, subsequently played back on audio cassette, replicated the results, giving birth to a classic advertising slogan, “Is it real or is it Memorex?” (1)

This note will focus on the identification of what we deem “real” in an increasingly distorted atmosphere.

“One morning I woke up and I knew
You were really gone.
A new day, a new way, and new eyes
To see the dawn.
Go your way, I'll go mine and
Carry on.”

- Crosby, Stills, Nash and Young; 1970

In the midst of working on the Déjà Vu album, Stephen Stills wrote “Carry On” to help him reconcile the inevitable break-up of his band. Hard to say if the EU will eventually reach such equanimity. However, Britain’s June 23rd referendum, decided 52-48%, in favor of exiting the European Union, means that we are about to find out. Today’s note will focus on the potential ramifications of Brexit.

We view this as more of a political than an economic event, but the two seem inextricably linked through the common thread of uncertainty.

“Put your hand on a stove for a minute and it seems like an hour. Sit with that special girl for an hour and it seems like a minute. That's relativity.” - Albert Einstein; 1879-1955

Recognized for creating the world’s most famous equation: E = mc2, Einstein received the Nobel Prize in Physics in 1921. He referred to gravity as the “general theory of relativity”. We will forgo the science lesson but will, instead, focus on both gravity and relativity.