With the important 4th quarter ahead of us, it’s time to check the rearview and see what transpired last quarter to get us where we are. Most markets trended up for the quarter, and there were no major geopolitical drivers for under- or out-performance. There are still a slew of worries surrounding global markets such as conflict in the Middle East, North Korea’s nuclear tests, weakness in banking in Europe (highlighted by recent trouble from Duetsche Bank, one of Germany’s largest banks), oil price stability, slowing growth, and elections in the United States. The growing trend of populism and protection from trade has also been on the rise and may potentially have a chilling effect on the global economy. The markets seem to be getting used to unconventional Central Bank policy. The Bank of Japan is leading the charge to this uncharted territory, with unprecedented buying of Equity and Fixed Income securities, negative interest rates, and now a focus on the yield curve to help prop up financial institutions.Continue reading
We experienced a very quiet, low-volatility market for the first two months and 3 weeks of the 2nd quarter. Then the Brexit happened!
For most of the quarter, equity investors continued the trend of climbing the wall of worry. The quarter saw concerns over the job market (only 38,000 jobs created in May), no growth in corporate earnings (for the 4th consecutive quarter), uncertainty over future Federal Reserve rate hikes, and anticipation of the British referendum over whether to stay in the European Union. But in the midst of all these concerns equity markets slowly climbed higher. It was not until June 24, when the surprise result came out of Britain to leave the EU, that the markets received a jolt of volatility.Continue reading