The biggest surprise was not the decline after the BREXIT vote, but the rally in a still uncertain world. Uncertainty or ambiguity should lead to more risk avoiding behavior yet risky markets bounced back last week. Conflicting signals on how BREXIT will be resolved and politicians that have been trying to score points for their views leads to a world that is more uncertain.
Nevertheless, there are other issues that will keep me up at night. The biggest issue is still growing leverage with non-financial companies and negative rates. Higher leverage will increase risks when there is a downturn. These are the seeds for future problems.
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