The global economy continues to expand with the three largest national economies (U.S., Europe, and China) all releasing positive growth data this past week. U.S. and Emerging Market equities, in particular, had very strong weeks. The MSCI All Country World Index hit a record high last week. International Developed Markets were about flat last week despite the good economic news.
Catalonia, a wealthy region of Spain which includes the city of Barcelona, is expected to declare independence from Spain in the coming week. A referendum vote was held on October 1st where 90% voted in favor of independence. However, Spain refuses to acknowledge the vote claiming it was against their constitution. Disturbing videos of ballot boxes being seized by Spanish riot police as they fire rubber bullets and batter voters have spread over the internet. Part of the reason for the people of Catalonia’s desire for independence is they feel ripped off by the national Spanish government. According to 2014 figures, the region paid almost €10 billion more in taxes than it received in services from the government. It is unclear how Catalonia’s independence vote will be welcomed in the international community. France has already stated that they will not recognize their independence.
As equity indexes around the world are setting new all-time highs, the CBOE Volatility Index hit an alltime low last week going back to the index inception in 1993. Even as missiles fly over Japan, the European Union cracks under social pressure, the unpredictability of President Trump, or natural disasters, this bull market refuses to give in to fear. It’s inevitable that we will see volatility again at some point. But it is hard to imagine what kind of catalyst it will take to get the market’s attention given the resiliency that we’ve seen recently.
Author: Jim Rambo | Research Team | Allegheny Financial Group | October 2017
The information included herein was obtained from sources which we believe reliable. This report is being provided for informational purposes only. It does not represent any specific investment and is not intended to be an offer of sale of any kind. Past performance is not a guarantee of future results.
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