The Independent Market Observer

3 Lessons from Brexit

June 30, 2016

With all the initial panic over the Brexit vote—and the subsequent relief as markets recovered—it’s been easy to lose sight of the bigger-picture lessons. Here are three that we should keep in mind.

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The Case for Brexit

June 29, 2016

Pretty much all of the coverage of the Brexit vote has been negative, and deservedly so. Even the positive spins have largely focused on how to either reverse the vote or minimize the damage.

When there's this much consensus on something, it’s usually time to take a close look at the other side. So let’s see if we can make a strong case that Brexit is a good thing.

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Appearance on Bloomberg TV, June 28, 2016 [Video]

June 29, 2016

Will the Brexit vote lead to another 2008, as many advisors and investors are wondering, or have we already weathered much of the storm, at least here in the U.S.? I talked about the economic fallout yesterday on Bloomberg TV’s Bloomberg Markets with program anchors David Gura, Vonnie Quinn, and Matt Miller. 

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Will Brexit Crash the Stock Market?

June 28, 2016

After a difficult two days, there’s a serious question on many investors’ minds: Is this the big one, the next crash? It's a reasonable concern. After all, haven’t we been hearing about all the damage Brexit could do? And haven’t we sort of been down this road before, with the Greek crisis in 2011?

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Monday Update: Brexit Raises Economic Risks

June 27, 2016

Last week's economic news fell below expectations across the board. Although housing markets continued to grow, there are potential signs of slowing, and business spending continues to be weak. Of course, the big news of the week—Britain’s decision to leave the EU—will probably exacerbate that weakness, even if it is unlikely to drive the U.S. into a recession.

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Brexit After All

June 24, 2016

I woke up early this morning to check the results of the British referendum on leaving the European Union. Against expectations, the Leave vote won a convincing victory, defying the polls and the prediction markets.

There’s no doubt the world has changed, significantly. There is considerable doubt about what that actually means and—more immediatelywhat to do about it.

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How to Be Wrong: Brexit Edition

June 23, 2016

As an analyst and economist, I spend most of my professional life being wrong, as does everyone else in my field. No one actually expects economic projections to come true consistently; no one has the ability to predict what the market will do.

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Beyond Brexit: The Longer-Term Risks

June 22, 2016

As we watch how the British referendum plays out tomorrow, we need to keep something in mind: It’s almost never the bus you are watching that hits you.

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Countdown to the Brexit Vote

June 21, 2016

With the British referendum on leaving the European Union—the “Brexit” vote—just two days away, worries are starting to rise again. As I wrote recently, I suspect that the Remain side will win. And even if the Leave camp prevails, the actual impact may be much less severe than many are now predicting. 

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Monday Update: More of the Same

June 20, 2016

Spanning the whole economy, last week’s reports were positive overall but mostly more of the same. Manufacturing continues to slog along with no indications of recovery, despite the first signs of stabilization in the oil-drilling sector. Retail sales, on the other hand, show the consumer driving even faster economic growth.

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Robo-Advice and the Future of the Financial Industry

June 17, 2016

The rise of automated financial advice—essentially, computer programs that rebalance your accounts—has been a hot topic in the investment industry. Blockchain technology, which could automate many functions now handled by securities exchanges, is another one. Just this morning, a colleague sent me an article about a start-up that looks to make transferring money essentially free, undercutting PayPal, which is already undercutting banks.

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What the Bond Market Is Telling Us

June 16, 2016

Yesterday, we talked about what the stock market is really saying. Briefly, despite all of the bad news out there, the stock market has not collapsed and the world is not coming to an end, at least in the short term. This, of course, is good news—but an absence of catastrophe doesn’t mean things will be good, either.

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What Is the Market Really Saying?

June 15, 2016

After a couple of posts on risky business (the Brexit vote and negative rates), let’s take a step back and look at the big picture. It’s easy to get caught up in individual stories, but we need to understand how they fit together—and what the market is saying about it all.

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The Bond Markets: Accentuating the Negative

June 14, 2016

The big news today in the financial world is that, for the first time on record, the yield on the German 10-year government bond dropped below zero. This is just the latest step in the ongoing decline in interest rates. In fact, the Japanese 15-year government bond recently went negative as well.

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Monday Update: Consumers Feel Confident (For the Moment)

June 13, 2016

The only major report last week was Friday’s release of the University of Michigan Consumer Sentiment Index. It remained essentially stable, with a small decline from 94.7 to 94.3.

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Things Fall Apart? Thoughts on the Brexit Vote

June 10, 2016

On June 23, Britain will vote on whether or not to leave the European Union, popularly known as Brexit (British exit). As the date approaches, concerns have been rising that the referendum might actually pass. What would it mean if it did?

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Bear Market Worries: The Big Picture

June 9, 2016

Over the last several posts, we’ve taken an in-depth look at bear markets—the factors that cause them, the events that indicate immediate risk is rising, and the time frames over which these events can develop. At the moment, the pieces don’t seem to be in place for a bear market, but the risk level does remain high.

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Monthly Market Risk Update: June 2016

June 8, 2016

This will be the penultimate post in our series on how to spot pending bear markets.

Although expensive valuations are a noted risk factor in past bear markets, they don’t give us much to go on timing-wise, as markets can stay expensive (or get much more expensive) for years and years.

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Bear Market Risks: Commodities and the Fed

June 7, 2016

Last week, we talked about several major warning signs for a bear market: recessions, commodity price spikes, rapid rate increases by the Federal Reserve, and high market valuations. In Friday’s Economic Risk Factor Update, we looked at the probability of a recession in the near future and concluded that it was unlikely.

Today, we’ll consider the next two risk factors: oil price spikes and Fed rate increases.

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Monday Update: Dismal Jobs Report Raises Concerns

June 6, 2016

Last week’s data was more mixed than in recent weeks, with a very weak employment report and worse-than-expected results in the service sector offsetting continued positive news on manufacturing and consumer income and spending.

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Economic Risk Factor Update: June 2016

June 3, 2016

In yesterday’s post, we concluded that a recession is the biggest and most consequential indicator of a bear market. The next obvious question is, how can we spot a recession coming?

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Market Thoughts for June 2016 [Video]

June 3, 2016

After an early pullback, improving economic news helped fuel a rally in U.S. indices at the end of May. While manufacturing remains a concern, improvements in consumer spending and housing have boosted confidence, prompting the Fed to suggest that the economy has normalized. Internationally, political risks continue to be a factor. And any bad news could well rattle the markets. What can we expect moving forward?

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What to Worry About: A Bear Market

June 2, 2016

Yesterday we discussed what not to worry about, so today let’s take a look at what we, as investors, should be worrying about. In short, that would be a long-lived, substantial decline in the stock market—otherwise known as a bear market.

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What Not to Worry About

June 1, 2016

I’ve been giving a presentation recently, developed during the worst of the first-quarter stock market pullback, that discusses what we, as investors, should worry about and why. It may seem obvious, but in fact, most people tend to focus on the wrong things.

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