The British actually voted to leave the EU and it wasn't even that close

I think by midnight last night EDT it was obvious that Leave was going to beat Remain

I think it ended up 52% voting to Brexit and 48% voting to remain

Of course, the markets were taken by surprise, in fact, we had a rally in to the close on Thursday as everybody was so confident that the polls would be right, and the online casinos would be right and that it was pretty much a sure thing that the British would vote to remain

All of the experts, the economists and the political elites around the world, including President Obama had lectured the British as to why the smart thing is to stay in the EU and how dangerous it would be, economic Armageddon - if they voted to leave

Of course this may have been reverse psychology

Especially when you've been sold a bill of goods over and over again, with cost of living rising and standard of living going down

The may be reaching for straws in the same manner as the Americans are voting for Donald Trump or Bernie Sanders

The straw that they had was Brexit

I think the markets are overreacting to the implications of the U.K. leaving the EU

After all, think of all the countries that aren't in the EU

Why aren't we all members?

Why doesn't the U.S. join?

They can't even get Switzerland to join the EU and it's located smack in the middle of Europe

One of the reasons why Switzerland is so prosperous is that it had the good sense not to join the EU

I think the markets believed their own hype

For so long, we've been talking about how awful it would be if the British actually voted to leave that when they did so, it was a self-fulfilling prophecy

Everybody is in this for a quick trade

A lot of traders are all levered up and do the minute this thing happened everybody hit the same sell button

This is just about traders having to reverse their bets

Look at what happened in the flight to safety - the dollar was way up against the pound

The pound really got "pounded" - it had its biggest down day in history

It was pounded even harder relative to gold - the price of gold in terms of the British pound rose above 1000 pounds per ounce last night

Gold was the strongest monetary asset of the day, but #2 was the yen

At one point I saw the yen was up 5% against the dollar, which meant it was up about 15% against the pound

Now why is everybody buying the yen, why are they buying the dollar?

People say it's a safe haven - not really.

Does anyone think that the Japanese economy is a bastion of safety?

Why would anybody worried about Europe buy the dollar?

Think about the irony of this: people are so worried about Britain leaving the EU that they're selling the pound to buy the Swiss franc - a country that never entered the Eurozone

It's not about safety.  It's about risk-on and risk-off

What is risk-on? That is when you buy risky assets like stocks

How does the leveraged speculative community fund a risk-on trade? they go to the funding currencies where you can borrow cheaply

The most popular funding currency is the Japanese yen because they pay you to borrow in yen

So it's real cheap, you can lever up, and to a lesser extent the dollar is a funding currency - we've had very low interest rates, especially relative to our rate of inflation