With just a couple weeks left to the year, we naturally ponder the main events of 2016 and how they might shape 2017. We try to abstain from political commentary and limit our opinions (here anyway!) to potential investment consequences from policy decisions.
Broadly speaking, the past week made fools of professional forecasters. Heading into the November 8th election, Hillary Clinton was the consensus favorite to win the presidency, with most polls pegging her chances at greater than 65%.
As you all know, the results of the US Presidential election were not what investors around the world anticipated. Surprise and uncertainty breeds volatility. Similar to the aftermath of Brexit last June, when UK voters approved to leave the European Union, markets around the world and the dollar are reacting negatively as we write this note.
The Los Angeles Times published an excellent long form series last week on the root causes of California’s burgeoning public pension funding gap. It is an interesting backstory characterized by financial myopia, cognitive bias, and endemic conflicts of interest.
Since the low back in February, and as we write this post, the S&P 500 has increased by more than 20%. This is remarkable considering the events of the past 6 months, such as the UK vote to exit the European Union, and the seemingly never-ending flow of terrorists’ acts around the world.
On Thursday, British citizens voted in a national referendum on whether or not their country should remain a part of the European Union (E.U.), of which it has been a member since 1973. At stake was Britain’s relationship to a much disliked supranational institution, and what this means for trade, sovereignty, and security.