Broken Brexit - You know that "oh sh*t" moment you feel when you check your portfolio and you're down like 20% in a single day? Well, safe to say, the U.K. can relate. The MVP of colonialism is apparently not doing so hot after it dumped it's former brethren in the EU. Export data has gone soft since the breakup of the century began a few years back, indicating a reduction in desire to trade with EU bloc nations.
Now, the divorce was announced years ago, but the separation was finalized on Jan 1 of this year, right where that second massive decline is in the below chart. EU bloc nations represent about half of U.K. export buyers. This could not have come at a worse time either. As does every major economy, the U.K. needs to be firing on all cylinders to combat the horrific decline caused by a little thing called COVID.
S&P 500 Switcheroo - In case you weren't aware, tech stocks make up a pretty big portion of the S&P 500. 28%, to be exact, but S&P Dow Jones Indices is now looking to chill that out a little bit. The index provider is reportedly considering reclassifying Visa, Mastercard, and PayPal as financial stocks to open up some breathing room in the tech sector.
While it's not completely crazy for S&P Dow to reshuffle sector classifications, the fact that Visa and Mastercard weren't already considered financials is creeping me out a little bit. It looks like these changes will be made, although the timeline isn't exactly clear. The chart below shows the effects on the sizes of certain sectors after previous large reshufflings were made, most notably, reclassifying Facebook and Google as Communication Services as opposed to Information Technology.
Still, this doesn't do much to help the roughly 1/5th of the index weight that is taken up by five tech stocks alone. This switcheroo would make financials likely the second biggest sector behind tech, because, well, Apple alone is worth slightly over 5 Visas.