Major averages fell yesterday on mixed volume as investors' nerves begin to fray in response to a looming potential "Brexit," the start of the two-day Fed policy meeting, and fears of an expanding global economic epidemic. The S&P 500 came within a hair of its 50-day moving average, while both the NASDAQ Composite and Dow Industrials closed below their respective 50-day lines.
While 53% of voters in the United Kingdom favor an exit from the EU, a rigged poll would come as no surprise. Bush-Gore 2000 anyone? You might want to watch the docudrama "Recount" as it is quite the eye-opener. The US also has put pressure on Prime Minister David Cameron to insure Britain will remain in the EU.
That said, if the UK leaves, the remaining countries within the EU would most likely be forced to consider doing the same. But if the UK stays, it will only further put a drag on the UK's economy as it has done since they joined. So UK politicians can blather all they want, the facts are the facts. Either way, as we have said, the euro's days are numbered.
The markets nevertheless hate uncertainty so expect heightened levels of volatility, at least over in the UK and in Europe until the vote is cast on June 23. Such volatility could bleed over into US markets. Futures are currently off about -0.3% as the UK and European markets trade lower by more than 1%.
The Federal Reserve concludes its two-day meeting this Wednesday at 2 pm ET while the Bank of Japan concludes its two-day meeting on Thursday.