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Everything Is Being Repriced after the Brexit Vote, Says Marc Lasry

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Markets are in correction mode

The Brexit referendum results are already playing havoc with the European and global (VXUS) (VT) (ACWX) capital markets. Asset prices, which have been artificially inflated to some extent due to the zero interest rate policies of central bankers, seem to be in correction mode.

Stock markets in the UK were also up on the weaker pound, which contributed to increased foreign revenue for large multinational firms in the UK.

repricing

The iShares MSCI United Kingdom ETF (EWU), which had gained over 10% between January 20–June 23, 2016, reversed that gain after June 23, 2016.

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Everything is being repriced

JJ Kinahan, chief strategist at TD Ameritrade, commented that the “toughest point for traders the last few days is we’re going through a repricing process, especially for financials so the relationships aren’t where they should be.”

Marc Lasry of Avenue Capital believes that everything is being repriced. The extent of this repricing is yet to be seen. According to Lasry, a 5%–10% repricing could occur.

Rapid repricing in the European markets (VGK) (IEV) is causing volatility to increase. Volatility can increase when such macro events occur, especially for hedge fund and private equity clients.

According to Morgan Stanley’s (MS) Ben Huneke, this is a good opportunity to look at your asset allocation, stay comfortable, and try to stay at the course. Huneke isn’t sure where the Market would go from a repricing perspective, but he notes that this is an important event that investors should monitor.

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