Sunday, June 26, 2016
Things that keep me up at night ... more than BREXIT
All eyes were on the BREXIT vote and the fall-out on Friday. It was a big event. The VIX index increased 24% in one day. The markets are likely to see further decreases in value and increases in volatility. The EU politicians seem to want to inflict pain on the UK as a signal to other countries. This strategy will not be helpful to markets.
Nevertheless, there are other macro issues to worry about. There is a growing realization that negative rates may not solve macro problems. This view is now being openly expressed by central bankers. This means that the one tool that has been employed to boost growth is losing creditability.