Financial markets reacted swiftly and sharply on Friday, June 24, 2016, to the unexpected decision by the United Kingdom (U.K.) to leave the European Union (EU) in a nationwide referendum held on June 23, 2016. Ahead of the vote, most financial market participants and political observers thought that the U.K. would vote to remain in the EU, and markets spent most of the day Friday adjusting to the reality that the U.K. will likely leave, sending equity prices lower, and bond and gold prices higher. The uncertainty in the markets, tightening financial conditions, and other potential impacts to the U.S. economy may influence the Federal Reserve’s (Fed) path of future rate hikes.

Defying sentiment polls leading up to yesterday’s historic Brexit referendum, British voters said “thanks, but no thanks” to excessive EU taxation and regulation, choosing to take back Britain’s sovereignty in financing, budgeting, immigration policy and other areas essential to a nation’s self-identity. It was a momentous victory for the “leave” camp, led by former London mayor Boris Johnson and U.K. Independence Party leader Nigel Farage, who invoked the 1990s sci-fi action film “Independence Day” by declaring June 23 “our independence day” from foreign rule.

Britain's decision yesterday to leave the European Union roiled global markets today. Investors' significant negative reaction reflects several fears and concerns over the lasting impact of the vote. While we acknowledge Brexit may increase both the likelihood and magnitude of shorter-term downside risk, we have positioned our broadly diversified portfolios for resilience across a wide range of scenarios, including periods of increased volatility like this one. We will follow up if our assessment results in material changes to our views or portfolio positioning.

With weaker than expected jobs growth in May, the Federal Reserve’s (Fed) recent disappointing economic forecast, negative interest rates around the globe, and the Brexit, the list of worries for investors continues to pile up. The U.S. economic recovery will turn seven at the end of this month, but very few realize that or feel like it has helped them. In the face of all the bad news, the S&P 500 is still only 2.8% away from a new all-time high. So maybe things aren’t so bad?

When Keynes expressed his thoughts in 1946, the world was beginning to recover from World War II and the Great Depression of the 1930s. As we cross the midpoint of 2016, the market is again staring into the dark, looking for a few sparks of global economic growth to light its path. In many ways, this is more than just a redux of the double-dip recession fears we waded through during 2010 and 2011.

With our baseline view of 2%–3% nominal growth over the next three to five years, Europe’s economic, fiscal, social and political environment will remain fragile. Investors should be cautious.

I want to continue the Brexit conversation from last week. With only six days left before U.K. voters head to the polls, expectations of which side might win are beginning to shift toward the “Brexiteers,” while betting markets are still putting money on the “stay” campaign. However, the probability of victory for those who favor keeping their European Union membership has weakened rather remarkably in the last month, falling from over 80 percent in mid-May to around 62 percent today, according to BCA Research.

With the European Union (EU) referendum now less than a week away, it is difficult here in Britain to think about much else. Given market movements this week, it appears this is the case throughout much of the globe.

You didn't come here today for bad news. There's plenty of that everywhere you look, and even where you don't look. So here's the good news. A new rush to gold has begun. To see where we're headed, let's first see where we've been.

It appears that, once again, the Federal Reserve’s hopes to raise interest rates are being stymied by the economy. Just last month the Fed’s minutes showed a predisposition to raise rates soon, and Chair Janet Yellen said it would probably raise rates “in coming months” should the data continue to meet expectations.

Impact investing has moved front and center on advisors’ radar screens, and rightly so. Clients from millennials to baby boomers are exploring the opportunity and encouraging their advisors to come up with options for investing in the space.

Our team spends a great deal of time debating the economic outlook and to say PJ Grzywacz is bright would be an understatement. Sometimes our discussions get passionate and I think it is a good thing. To wit, passion in everything is a good thing. PJ challenges all things that might lead to “groupthink” biases. Something we think about a lot.

Last week, the 10-year Treasury yield dropped to just 1.6%. Technician Walter Murphy noted that his index of global 10-year yields also plunged to an all-time low. The overall structure of global bond yields is undoubtedly the outcome of years of aggressive monetary easing, though the break to fresh lows among European bank stocks may convey some additional information content. Of course, the compression of prospective investment returns isn’t limited to bonds. On the basis of the valuation measures best correlated with actual subsequent S&P 500 total returns across history, prospective 10-12 year S&P 500 nominal total returns have declined to just 0-2% by our estimates, with negative real expected returns on both horizons.

We who inhabit the northern hemisphere will soon enter summer. Many would say summer is already with us – most schools are closed, and a general laziness is beginning to set in – especially for those in the “protected” class. For many of them, summer is a verb. They “summer” in the Hamptons, or Lake Tahoe, or somewhere in the tropics.

If you’re a serious investor—and because you’re reading this, I have to assume that you are—gold is looking more and more like a crucial trade. Only two weeks remain before United Kingdom voters decide on whether the country will continue to be a member of the European Union (EU) or become the first-ever to leave it. The “Brexit,” as it’s come to be known, is arguably the most consequential political event of 2016—perhaps even more so than the U.S. presidential election in November—with far-reaching implications.

With $2.6 trillion in assets under management, private equity has long been a core investment strategy for institutional investors across the globe.1 In fact, endowments alone have allocated ~21% of their portfolio to private equity investments.2 For many individual investors, however, private equity has historically been difficult to access and even more difficult to build a well diversified portfolio. Our belief is that one’s net worth should not dictate the availability or quality of investment options.

Markets have taken investors on a wild ride in 2016, with conflicting messages about expectations for economic growth and inflation. Through April, the S&P 500 Index had returned just more than 3%, erasing its 10% correction at the start of the year. Since a trough on Feb. 11, global and domestic equities have largely followed suit and rebounded to the levels of fourth-quarter 2015. The 10-year U.S. Treasury yield hit a low for the year so far of 1.66% on that date, but ended April around 1.83% — although not without its own choppiness. The CBOE Volatility Index spiked in January and February, fell off in March and early April and then showed rising volatility again at the end of April. In our view, this has become a speculative market.

Janet Yellen and other Fed officials spent the last few weeks cautioning investors that a rate increase could be imminent owing to favorable economic data. Then came a weak jobs report. Will they or won’t they? Investors are left wondering how to weather the volatility that lies ahead.

This week’s economic calendar is the lightest in recent memory. After Monday, FedSpeak fans will be disappointed, since we are entering the quiet period before the next FOMC meeting. Like nature, pundits abhor a vacuum. To fill it they will be asking: Is the weak employment report big news for stocks?

Do you remember back in the early 80s when interest rates peaked at 15.25% and most everyone felt rates were moving higher, certainly not lower?  The fact is, it was the single best time in history to get bullish on bonds.

Sometimes you can go through that process and still end up bearish on almost everything. Richard Fisher seems to be in that camp. Asked in our final wrap-up panel Friday morning how his own portfolio was positioned, Fisher answered with one word: “Fetal.” And while his answer got a general laugh and a lot of pushback on the final panel from Niall Ferguson, who thinks he sees the beginning of an inflection point, it seemed a pretty good summary of the conference.

Yesterday we discussed what not to worry about, so today let’s take a look at what we, as investors, should be worrying about. In short, that would be a long-lived, substantial decline in the stock market—otherwise known as a bear market.

In 1992 I took a gap year from University. I traveled all over Europe and the Middle East while making London my base. There was no internet, no cell phones. We would send home hand written letters. The turnaround time to receive one back was about 3 weeks. I guess that makes you selective in what you write, only the important stuff!

Gold output across the globe hit an all-time high in 2015, climbing 1.8 percent to 3,211 tonnes. Much of this growth was led by Mexico, whose output increased double digits (18 percent) from 112 tonnes in 2014 to 133 tonnes last year. Indonesia grew 20 percent, Kazakhstan 29 percent.

Rick Rieder shares a chart showing why to get used to living in a low-growth world.

In recent decades, the Federal Reserve has become much more open. However, Fed communications have not always been received clearly by financial market participants. That has become problematic on a number of levels.

This month I have moved my attention to Washington. I am concerned that the Federal Reserve Bank is far too inactive, potentially leading to much more significant inflation down the road. I should stress that our European readers shouldn't worry too much, as the situation is fundamentally different on this side of the Atlantic, but rising U.S. inflation will obviously have at least some effect on European interest rates. Enjoy the read.

A widely circulated McKinsey report, Diminishing Returns: Why Investors May Need to Lower Their Expectations, makes the case that both stock and bond returns over 1985-2014 were exceptional and that investors should expect lower returns in the future. Will investors who think that 3% to 5% savings rates will get them close to their goals be disappointed?

Just a few decades ago, a challenge to becoming a fashion designer in China was that most people equated that to being a seamstress. But in China's burgeoning world of fashion, local designers now seek to replace the mantra of “Made in China” with “Designed in China.”

Coaches tell athletes that if they still have any energy left when they head back into the locker room when the game is over, they haven’t played hard enough. You’re supposed to leave it all on the field. That’s pretty much how I feel right now, so I don’t have a lot of energy to write a new letter. But thankfully, the comments we received from my May 15 letter, “Life on the Edge,” were among the best we’ve ever had. So I am going to reproduce them and maybe add a few responses of my own in between.

With negative yields and financial experimentation ongoing and the world still dependent on monetary stimulus, Portfolio Manager Charlie Dreifus sees high-quality, inexpensive, and dividend-growing businesses as the best choice in a still challenging environment.

According to the Peterson Institute for International Economics (PIIE), the TPP “will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, by 2030.” For all member nations, the deal is expected to add $492 billion in real income.

We believe that Billy Joel is perhaps the most preeminent singer/songwriter of the U.S. baby-boom generation. Art, like Billy Joel’s music, has a tendency to mirror culture and economics. Thanks to his recent tour in the U.S., we were reminded of how four of Billy’s greatest hits speak to our current circumstances in the stock market and give incredible advice about how to behave as investors over the next ten years.

Sometimes it is good to sit back, reflect, recharge and then, once again, drive forward.  I pulled open a drawer and found, tucked at the bottom of a pile, a few notes I wrote down many years ago.  Notes from Mom…  I wanted to remember her.

This is a slightly expanded version of a letter that I have already sent to those who will be attending next week’s Strategic Investment Conference in Dallas. It covers the agenda in detail and will give you an idea of how I go about putting a conference together and what I’m trying to learn from the speakers. If this is of no interest to you, just skip it and go to the end where I will share some brief impressions from my time in Abu Dhabi.

Progressively more companies of dubious value creation have emerged which choke off healthy economic growth just as weeds do. The ultimate cause has been disjointed economic policy which often undermines the natural strengths of capitalism, free markets, and the rule of law.

Something’s gotta give. The global growth environment remains subpar — stable but at a disappointingly sluggish pace. Central bankers, where possible, continue to ease policy, but the financial market reaction is increasingly unpredictable. In this environment, the predominant theme this year has been a bounce back in the most beaten-down assets — including commodities and emerging markets.

Strange are the times when a third of all government debt around the world carries a negative yield, and yet such is the case today. From Japan to eurozone countries, investors are faced with the tough decision of accepting subzero yields, doing nothing—or seeking other so-called “safe haven” options. Many have rediscovered gold, and as I pointed out earlier this week, demand for the yellow metal as an investment just had its best first quarter ever, with near-record inflows into gold ETFs.

Global CIO Jeff Hussey shares 5 of the best questions we hear from clients considering multi-asset investing providers.

Job growth may be slowing, but when put in a broader context, it may also be at the height of its new potential. In last week’s Weekly Economic Commentary, “Yet Another Disconnect,” we wrote that according to several Federal Reserve (Fed) officials, monthly job gains as low as 125,000 per month in the U.S. would be enough to tighten the labor market, take up slack in the economy, and push up wages and ultimately inflation.

The most successful athletes and artists must spend hours practicing. But it’s not just LeBron James, Yo-Yo Ma and Bruce Springsteen who benefit from regular, focused practice. A recent conversation with a leading researcher on peak performance highlighted how advisors benefit from some of the same principles of focused practice.

A calmer tone prevailed across markets in April despite major central banks choosing to pause from adding substantial support. Mixed economic data underscored a tepid fundamental backdrop. The market rally continued in April, though underlying sentiment may have cooled more than the rally suggested.

This week’s economic calendar includes some key data on the housing market and few other major reports. The debate about the strength of the U.S. economy continues. The housing market is an important contributor to the economy. As we enter the key season for real estate many will be asking: Is it Springtime for housing?

This year’s first quarter is one for the history books. Not only did gold appreciate at its fastest pace in 30 years, but demand for the yellow metal was the strongest it’s ever been on record. Let me repeat that: the strongest it has ever been. Demand surged 21 percent from the same period a year ago, according to the latest World Gold Council (WGC) report. Most of this demand was driven by investment, with net inflows into gold ETFs reaching 363.7 tonnes, a seven-year high.

Our interview with Bloomberg’s ETF expert on his new book: what’s next in ETFs, how investors will find performance in the future and why smart beta is a “very big deal.”

Did you pull out of high-yield bonds when the year began, and miss the recent rally? If so, don’t worry. We still see opportunities in high-yield and other high-income assets around the globe.

At the beginning of each month, I like to look at equity market valuations. The stock market moved higher in April, yet for the fourth quarter in a row, corporate earnings were down. The good news about market valuations is that they can tell us a great deal about the annualized returns we are likely to get over the coming 10 years. The bad news is they tell us little about returns over the coming two years.

The past five years have been challenging for long-term value-based asset allocation. We do not believe this constitutes a paradigm shift, dooming such strategies in the future. The basic driver for long-term value working historically has been the excessive volatility of asset prices relative to their underlying fundamental cash flows, and recent history does not show any evidence of that changing. Outperforming the markets given that pattern requires either betting that the excessive swings will reverse over time or accurately predicting what those excessive swings will be. The former strategy amounts to long-term value-based investing, while the latter requires outpredicting others as to both what surprises will hit the markets and how the markets will react to them. Our strong preference is to focus on long-term value, despite the inevitable periods of tough performance that strategy will entail.

Incoming economic data offered markets little to cheer about in April ahead of the Fed’s third meeting of 2016. The price of oil rose more than 20% while the U.S. dollar edged lower for the third straight month.