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Mackenzie Chief Economist Todd Mattina analyzes issues and implications of the results of Italy’s constitutional referendum.
Markets were heavily influenced in the first quarter by political factors revolving around U.S. President Donald Trump. Equity markets were powered to new highs during the quarter in what has been called the “Trump Trade” or “Trump Bump”, but perhaps more accurately reflects ongoing improvement in the U.S. and global economy. On balance, that mix of factors pushed risky assets up and led to the first U.S. Fed rate hike of 2017 in March.
The last quarter of 2016 was full of surprises. First, similar to Q2’s surprise Brexit result, Q4 saw Donald Trump’s surprise victory in the US Presidential election. Leading up to the election, volatility increased and equity markets were pulled downward as the odds of a Trump victory increased.
2016 got off to a rocky start for investors, and the uncertainty resurfaced again this summer with Brexit temporarily roiling markets followed by various Central Banks continuing to explore quantitative easing and other non-traditional monetary policy strategies.
Economic, financial market and political uncertainty continued to be the order of the day in the second quarter of 2016. Global financial markets opened the quarter with volatility related to fears of potential Fed rate hikes and closed the quarter amid the volatility related to the U.K.’s Brexit referendum.