Market volatility: The volatility investors witnessed in the global financial markets at the beginning of the year has certainly lessened in intensity recently, but various issues and events persist that will likely continue to cause flare-ups in market volatility for the remainder of the year. Whether it is the Brexit vote, FOMC meetings, or the political rhetoric that is about to heat up with the national nominating conventions for the Presidential election, there are plenty of factors that have the potential to keep market volatility elevated in the near-term. That said, recent market corrections have quickly found their footing, something we will touch on more in a bit.
The most recent notable example was the Brexit vote that took place on June 23rd. Although this event was well telegraphed and widely discussed, the decision to leave the EU surprised markets and caused a sharp plunge in the following days. One of the reasons markets bounced back so quickly was likely the realization that there will be little immediate impact (the effect on the British pound notwithstanding). Britain first has to elect a new Prime Minister, then enact Article 50 of the Lisbon Treaty (Q4) to start the clock on the withdrawal process. So negotiations surrounding their exit from the EU won’t even begin to take form until 2017, and could last up to 2 years.