US interest rates are on the rise. It took the Federal Reserve Bank (“Fed”) twelve months, after the initial lift-off in December 2015, to make the second move, but for two reasons the odds of more frequent rate hikes over the next twelve months have increased.
The year 2016 was full of surprises. It was, for example, the year, when an outsider overcame odds of 5000 to 1 to win the Premier League. It was also the year, when the lyrics of three-minute pop songs were acknowledged to be an art form worth the Literature Nobel. Most importantly, however, politics in the Western hemisphere surprised big time with the vote for Brexit and the election of Donald Trump as the next US president.
From a technical point of view, the concept of a “year-end rally” is a myth. At least, this is what empirical evidence is telling us. In the past 10 years, the S&P 500, for example, posted a December performance, on average, of 1.12%, making December only the 5th-best month of the year (Fig.1). Over the […]
The outcome of the US election last week, together with the Brexit-vote in June, was the second major political event this year that shook financial markets. In both cases the outcome was different to what pollsters, the media and investors anticipated. Unsurprisingly, markets – across asset-classes and geographies – reacted strongly and in some cases […]
The Brexit-vote was a non-event, it seems. At least, that is what global equity markets are telling us. Since June 24 – the day after the referendum – US, European and Japanese indices all have gained around 10% in local currencies (up to August 19). Emerging Markets, on average, made a similar move as well. […]
Yesterday’s referendum in the UK surprised with a narrow majority in favour of Brexit. According to the latest results, 51.8% voted for the Brexit, i.e. the exit from the EU. Polls and betting odds had been suggesting a majority in favour of remaining (“Bremain”) in the EU. As expected, Brexit is triggering a massive negative […]
Less than a week is left before the British electorate will decide whether the United Kingdom should remain a member of the European Union (the Bremain scenario) or leave the union, an outcome known as Brexit. Two months ago, when we started covering this event in a series of blogs (see here, here, here and […]
Stock markets not impressed – so far While the debate about Brexit is getting more intense (just a day ago the UK Treasury released its warnings) and the Pound Sterling is trading near historical lows as the referendum is approaching, the UK equity market has not shown any signs of stress. Its valuation premium to […]
What financial markets are telling us about Brexit The UK’s exit from the European Union – known as “Brexit” – would be a major economic and political event for the UK, Europa and the wider world. While Brexit is not the most likely outcome (see the first blog in this series), it is a real […]
The economic implications of Brexit Opinion polls and betting odds as well as the muted response of debt and equity investors suggest that Brexit – the UK’s exit from the EU – is not the most likely scenario. That said, it cannot be ruled out. For example, about a quarter of all opinion polls conducted […]