U.S. firms are bracing for long-term disruption, job cuts, and lower profits after Great Britain decides to leave the European Union. Bobbi Rebell reports.
Britain's decision to leave the European Union will impact many U.S. companies, raising new issues for even the most well prepared. Already some have taken action, hedging against further drops in the British pound. Legal advice on trade agreements and regulations is also a priority. A big concern as well: how could relations from European trade partners be impacted. But many U.S. companies are actually well positioned, says Nick Colas, chief market strategist at ConvergEx . (SOUNDBITE) NICK COLAS, CHIEF MARKET STRATEGIST, CONVERGEX, (ENGLISH) SAYING: "U.S. companies have been very good at improving their profit margins in a very slow global economy over the course of the past five years. As a result, they're generally at over trend margins, which means that companies do have some flexibility, I think, to adapt to this potentially slower, more volatile world without meaningfully impacting their earnings power. So, that's probably good news, but, it comes out from such a high base that investors have been worried how sustainable these margins are, so it will be a real challenge, a real tug of war between what the companies can do in this volatility, and what investors expect." That's not to say U.S. firms aren't bracing for long-term disruptions, including potential job cuts, and lower profits. Uncertainty will be an overhang for quite some time because of the long time line for Britain to exit the European Union.