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.
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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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