Nationalism Overcomes Globalism In Brexit Vote - More To Come

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Includes: DIA, IWM, QQQ, SPY
by: Gary Bourgeault

Summary

Britain leaving EU only the beginning of consequences of populist uprisings.

The upcoming recession will trigger more exits.

Investing implications.

Click to enlarge

Source: CNN

The elite globalists took the first of many blows that will eventually lead to a knockout punch, as the people of Britain voted to leave the EU. This is representative of a growing populist movement in the West that will change the structure of civilization over the next couple of decades.

What was considered a group of people on the fringe of societies around the world in the recent past, has now become a powerful movement that is gaining momentum, which will lead to a disruption in the plans of globalists trying to force their plans and schemes on people.

Below is an example from a leftist of the type of arrogance and superiority complex supporters of globalism represent:

"There is a growing realization in many corners of the U.K. that the EU referendum should never have been called in the first place. Unlike the national sovereignty debates of Scotland and even Quebec, which were largely dependent on a people's sense of cultural identity, the question of EU membership and whether it truly benefits Britain is exceedingly complex, fantastically dull, hugely important, and exactly the sort of thing policy-makers are elected to decide so normal people don't have to."

That's just another way of saying once politicians are voted into office, the voters need to leave them to their own devices. The populist uprising is the push back from this type of elitist attitude and thinking. After it spreads across Europe and Scandinavian countries, what will be left of the EU will be much smaller than it is today, if it survives as a meaningful entity at all.

While mainstream media has attempted to make this look like some type of ominous and disastrous event and outcome, the truth is, from a financial point of view, is this isn't going to be as difficult for the economy as many are suggesting.

There will of course be some temporary disruptions, but once the smoke clears it's likely the markets will settle down and will get back to the fundamentals.

After all, does anyone seriously think the EU as it stands, is going to cut back on doing business with an economy the size Britain has? The EU has its own problems now that it's obvious its credibility and usefulness is in question. It will struggle to survive in the years ahead, attempting to stop the exodus of even more member states. It won't be long before Britain will be considered the least of its problems.

Populist sentiment and nationalism

All investors need to look at the implications of the growing populist movement and citizens of countries gravitating toward nationalism. Calls of racism and other negative epithets are further fueling the fire as people are increasingly enraged at being castigated for wanting to retain their national identities and traditions, against the backdrop of forced acceptance of immigrants having no interest in assimilating into the culture of the countries they're essentially invading - even if it's an invasion by invitation from some of the political leaders.

What's most important to understand is the bloc agreements made in the past will be have to changed, not only in the case of Britain, but with those countries that will follow it out of the European Union.

This is where the fears are being stoked to give the appearance of an economic disaster being inevitable if Britain and others abandon the EU. But the truth is the world operated just fine without the EU in the past, and it'll do the same whatever is left of the EU after the upcoming exits in the years ahead.

An example of the change in agreements will be how banks based in Britain will be able to access the European market after the exit. That will be true of all industries and companies using the UK as a doorway to Europe. How business is done will have to be adapted to the new realities of an independent UK, but I don't see there being much of a difference once the needed changes are put into effect. The idea that Europe will significantly decrease doing business with one of the largest economies in the world is ludicrous at best. As mentioned earlier, now that the UK is leaving the EU, it will have to go into damage control in order to try to stem the tide of the inevitable exits of other countries facing populist uprisings of their own.

For investors, the need to look at specific companies they have a position in as it concerns the effect the loss of some bloc agreements may have on them, is the key factor going forward. That will take some time to work through, but that's probably the major thing to watch in regard to investing over the next year or two, as it relates to companies with exposure to the UK and Europe.

What's most important is how Britain negotiates its exit. Other member states looking to leave will use that as a stepping stone to get a better deal when their time comes to exit. How many countries may leave the EU, and under what terms will be determined by how well Britain negotiates its own exit. That doesn't bode well for the European Union.

The obvious exit trigger

Growing populist and nationalist movements are undergirding the desire to exit the EU, but there isn't enough negative sentiment at this time to trigger that to happen; it'll take a powerful catalyst to do that, and that catalyst, in my view, will be the upcoming global recession, which when added to discontentment of the masses, will call for demands for an exit because the accompanying risks of remaining in the EU will be considered to outweigh the value.

If that's how it plays out, and I'm convinced it will, that means it won't be too many years before this takes place. Most economic indicators point to a global economic slowdown, and there is nothing to hold back a recession from coming some time within the next several years; it'll probably be sooner than later, but however long it takes, it's going to come.

Will populist uprisings continuing to gain momentum, and the globalists refusing to give in on key issues like unbridled immigration, the recession will happen when those elements remain part of the forces wanting very different futures. Those collision of wills will force more referendums, with the EU undoubtedly losing more members.

Once interesting aside to this in relationship to the UK, is it will bring another vote from leftist Scotland, which actually prefers to stay in the EU. Depending on the circumstances it faces in 2020, when the next referendum on whether or not to stay in the UK will take place, it could decide to go it alone.

Either way, the economic state of the world will be the major catalyst deciding the fate and direction of a number of nations over the next few years.

Investment implications

The major investment implication as I see it is the bloc agreements in place in Europe which will have to be renegotiated on an individual basis. If Britain were the only nation to be leaving Europe, the EU may have more leverage to make demands and cause some economic damage to countries, but I don't see that as being the reality.

I think it's obvious this is only the first salvo in this globalist versus nationalist war, and we're only in the early stages of the populist movement, which has a long way to play out.

Companies with significant exposure to the EU will experience some turbulent times over the next decade, as uncertainties rise as to the response of the EU to the respective countries they're located in, if those countries leave. Again, since the EU is going to be significantly weakened, especially if France or Italy decide to leave, it will lose leverage and strength as a result, and it's bargaining position won't be what it has been in the past.

That's already the case with the UK leaving, and it'll only decline in power as member states abandon the eurozone.

With that in mind, I see there being a temporary increase uncertainty and volatility as this plays itself out, as there will be headlines promoting fear and trepidation over the EU trying to play a stronger hand than it has to play. This will produce concern and emotional responses in a number of investors that will bring about major swings in the market.

But with a weakening EU and strengthening of the negotiating positions of individual countries, this will work itself out and start to balance off. The volatility will continue until a clear picture is seen as to what the EU will become after the exodus is over. This will take a number of years to accomplish.

Conclusions

I think investors need to understand this is far from the end of the world, it will, over time, be a positive event for individual economies, as the need to negotiate deals from country to country will produce better outcomes for all parties involved.

The result will be economically stronger individual nations that are working out trade deals that are best for their own citizens. Together, these deals should bring about a tide that raises all ships, with the global economy being the winner.

There'll be a lot of whining and fear-mongering in the years ahead, as the globalists attempt to make this appear to be the worst thing to happen in human history, but as the economic results filter in, and it's discovered things are going quite well, this assertion will gradually lose its power and the nations and their peoples will realize there was never a need for the monstrosity of the eurozone, which went far beyond economics, in an attempt to change the world into their desired image.

That overreach will now drastically weaken their global plans and goals, and result in the rise of nations engaging in trade that will benefit all parties involved. Investors will be the winners once this works its way through the transformation.

I have no idea what the EU will look like in a decade, but I do know it'll be a lot smaller than it is today, and it'll wield a lot less influence. The next recession will, without a doubt, be what triggers the exodus. Invest accordingly.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.