A multitude of risk factors have unsettled the markets during the first six months of the year. Britain’s decision to exit the European Union (51.9% vs 48.1%) has sent shock waves through financial markets and rattled investors who underestimated its risk. It is the most recent and blatant example of the growing global trend towards protectionism. It will have tremendous repercus- sions on the geopolitical landscape including this fall’s US election.
In the fourth quarter, the economic and political news was marked by a synchronized global economic upsurge, rapidly expanding corporate profits, the adoption of a sweeping tax reform bill in the U.S. and somewhat eased geopolitical tensions.