How Does the Brexit Impact the US Economy? Rudy R. Miller Explains

The United Kingdom’s vote on June 23 to leave the European Union (a 52% to 48% final tally) was the biggest story of the day. The financial world has been scrambling in the wake of Brexit. The Miller Group’s CEO, Rudy Miller, a frequent guest, discusses the historic vote and what it will mean in the longer run in this report.

The short version of the event, Miller says, is that the citizens of the UK made the political decision to leave the EU. One aspect of the vote is that it was a move towards independence, a decision that the country should not be governed by the EU. In addition to the issue of political independence, there is a matter of economic independence. “The EU is telling you what hair dryer to buy.” Miller points out that the British people have a strong sense of independence, and they spoke out at the polls. Britain has had a long history with the EU, but it will be moving away.

Rudy R. Miller

Rudy R. Miller

The vote by British voters to leave the EU has caused Prime Minister David Cameron to resign. He will step down in October. Miller says that this causes some obvious uncertainty politically and in the financial world, as people wonder who will be the next prime minister and what the country’s political direction will be. Miller quotes a friend in London who said, “It’s a bloody mess on the market, but many people are celebrating their independence.”

As to what happens next, Miller explains that the Treaty of Lisbon contains Article 50 that provides a means for a country to leave the EU. The exit process would take at least two years, during which time the UK would continue to abide by all EU treaties and laws. During that time, Britain would negotiate the terms of its departure. Issues include financial regulations, trade arrangements, and the movement of British nationals through EU countries.

Miller notes that Britain’s decision to leave the EU might encourage similar referendums in other countries or efforts to get special accommodations from the EU. There will be elections soon in several European countries. There has also been talk that Scotland, where the citizens voted to stay in the EU, might seek independence from the UK so as to join the EU.

As to the financial effect of the Brexit vote, Miller believes it will be less than some are saying. “It’s not 2008, when we had our banks in a financial economic crisis.” The events of 2008 left banks in Europe and America stronger than they were. However, there will be many financial jobs that will move from London to other places because of Britain’s decision.

Miller does not believe that the drop in stock markets today is the first sign of a major recession. He sees it as “a flight to safety.” Miller points to the gold market, which reached a two-year high today. Treasury bonds are selling well. Notwithstanding some bumps on the road, Miller believes that the US economy is stronger than any of the European economies. He also believes that the Fed is glad it did not raise interest rates, and he believes there will be no further increases in 2016.

Rudy R. Miller is the Chairman, President, and Chief Executive Officer of The Miller Group as well as Miller Capital Corporation, an affiliated company The Miller Group, established in 1972. He was the Founder and Chairman of the Board of Miller Capital Markets, a FINRA member investment banking firm, from 2006 through 2012. He has over 35 years of executive-level experience owning, operating and advising corporations, from large NYSE listed public companies to emerging-growth private companies. His extensive operating and advisory experience provides clients with a comprehensive understanding into the challenges of successfully navigating a business through varying economic climates. The Legal Broadcast Network is a featured network of Sequence Media Group.

Structured settlement purchase firm JG Wentworth pushes back against CFPB

In yet another sign the structured settlement purchasing profession is in the regulatory cross hairs, the Consumer Financial Protection Bureau, CFPB, recently filed a complaint and action against settlement purchasing giant JG Wentworth. The allegation as described in the complaint is that Wentworth's method of solicitation and purchase of structured settlement cash flows is deceptive and harmful to consumers. 

JG Wentworth has fired back with their own defense that the CFPB is outside it's jurisdiction, and that much like it's prior attack on for profit colleges, the CFPB will lose this case as well. The Settlement Channel and The Legal Broadcast Network will continue to monitor the case and report as events unfold. 

Are structured settlements a good idea in a zero interest rate world?

In this week's commentary on The Settlement Channel, commentator and structured settlement planning expert Mark Wahlstrom, looks at the issue of zero interest rates, or even negative rates of interest, being offered on fixed income investments, in particular structured settlement annuity contracts. One of the constant refrains that structured settlement experts hear from trial lawyers, as well as their clients, is that structured settlements are a bad idea in a world where interest rates are offering effectively zero rate of returns when you factor inflation into the yield at 2%. On its face, you would think it's hard to argue with that logic as the US is clearly in a historic period of zero to negative yields on fixed income and annuities. 

However, in practical experience, settlement planners and structured settlement experts have been hearing this same narrative for over 15 years now, as we have been in a 25 year bond market rally where rates have gone from double digits to the current negative or zero yields on high quality bonds and notes. It has always been "rates are too low compared to the past," but all along that 25 year curve, the value of a guaranteed, tax free income has been proven to be the key component of just about every successful settlement plan. The rate of return or yield is important for sure, but the consistency of the cash flow, monthly income, and security are paramount to injury victims who rely on those funds to live.  personally attest that 15 years ago people were rejecting tax free yields of 7% to 8% as "too low," when the evidence of the last 15 years now shows that anyone smart enough to take those tax free deals was getting a yield roughly equal to that of the S&P over that same time frame, particularly when taxes and management expenses are deducted and a net yield is calculated. 

Wahlstrom concludes that even in a low interest rate world such as we see now, that while it might seem counter intuitive, it's entirely possible in a period of economic turmoil that the certainty and safety of a structured settlement payment stream makes the MOST sense as the people who rely on it can't afford to be with out an income, ever. His advice is don't just focus on rates of return and what you think you might get in alternative investments, instead engage a competent structured settlement expert such as those found on the Settlement Expert directory to assist you in designing a settlement plan that makes sense. Chances are good trial lawyers and their clients won't look back in 10-15 years with buyers remorse if they do. 

US Senate Rejects Four Gun Control Measures

Fox News reports that the Senate will be voting on 4 gun control measures, in response to both the massacre in Orlando and Senator Murphy’s 15-hour filibuster last week. The lawmakers were not able to compromise on legislation so there are 4 individual bills to be voted on, 2 by Democrats and 2 by Republicans.

For the Democrats, one measure would expand gun background checks and the other would keep people listed on government terrorism watch lists or suspected terrorists from buying guns. This  2nd measure is also endorsed by the Justice Department. Republicans allegedly feel both of these measures threaten the constitutional rights of gun owners.

The Republicans proposals are a measure that allows the government to delay a gun sale to a suspected terrorists for 72 hours, but would require prosecutors to go to court and show probable cause, this measure is supported by the NRA. The other would raise funds for the National Instant Criminal Background Check System to ensure records are correct and uploaded into the system in a timely manner. This measure also includes language clarifying mental health issues that disqualify someone from buying a gun but Democrats feel that language actually would roll back current protections.

Donald Trump Fires Campaign Manager Corey Lewandowski

With the most significant staff change to date, CNN is reporting that Donald Trump has fired is campaign manager Corey Lewandowski. According to an adviser to the campaign, the decision was made swiftly in a morning meeting with Trump and his family and has cited his daughter Ivanka as the driving force behind convincing the Presidential hopeful to fire him. CNN also reports of an alleged issue between Lewandowski and Ivanka Trump’s husband Jared Kushner, as Kushner’s role in the campaign has grown significantly.

Campaign advisers also felt Lewandowski presented other issues, such as not being able to bring on experienced veteran strategists to the campaign and were worried that he was too much of an influence on issues that ultimately did not matter to the campaign. The move is considered by them to be a major reset, which may be what the campaign needs as calls for Trump to the down his rhetoric and to act more presidential have become louder.

The move is also expected to allow the campaign to ramp up in battleground states while transitioning from a what some have considered a concert tour into a real campaign.