Never in a million years would I have imagined that I would be sitting here just two weeks after Brexit and see the S&P 500 at an all-time high. In fact, if anything, the June jobs report should be worrying the markets that the Fed may in fact raise short-term interest rates later this year.
There is as much uncertainty about Brexit today as there was two weeks ago. The only thing resolving itself more quickly than anticipated is the leadership change in the U.K.
But Brexit does matter - despite the title! The markets, in the absence of any clear idea of what will ultimately happen, just seem to be taking a wait and see attitude for now.
Lest you or your clients get too excited about this rally, remember two things: we are still smack in the middle of the slow - and volatile - summer months and earnings season has just begun. And earnings matter to the market.
While there is a general expectation that earnings will be better than last quarter, they are still expected to be negative. And if some big names disappoint ....
In any case, expect volatility to continue. And don't forget the Presidential election is right around the corner. Could the election be the next Brexit to jolt the markets?
Now would be a great time to remind clients not to get too excited about this rally, just as they should have not gotten too depressed a few weeks ago. Remind them that the best path to financial success is having an up-to-date financial plan, an investment portfolio which matches their goals and resources and a long-term investment perspective.
Brexit and Jobs
I was asked to write a piece for efinancialcareers.com on the outlook for jobs in the financial services industry in light of Brexit. While the ultimate outcome is uncertain, I believe hiring will slow as companies take a wait and see attitude.
A number of recent articles have caught my attention, as they revolve around similar themes - threats to advisors and RIAs. The articles deal with a variety of topics - from robo-advisors to a reluctance of many clients to make referrals. Taken together, they should be an eye-opener.
I thought it worthwhile to mention this topic again month. Plan now for the rest of the year and ensure that you don't fall victim to some of these trends.
