What Last Week Told Us About the Market
The high returns of the first quarter may be giving way to volatility and risk.
Hot potato.
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Three events featured prominently in the financial news last week. Each was significant in its own right, but together they point to the risk in coming months that volatility and investor discomfort could follow what has been a comforting first quarter of across-the-board high returns, relatively low volatility and favorable correlations.
Messy Bexit Saga: Parliament was again unable to reach consensus on the way forward for the U.K.’s relationship with the European Union. It rejected for the third time a proposal tabled by the government of Prime Minster Theresa May, and also blocked eight other alternatives offered by lawmakers. The inability of Parliament to come up with a solution was another demonstration of deep divisions within the Conservative and Labour Parties and highlighted the broader splits within the U.K. on this issue.