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Investors Are Ignoring A Potentially Large Disruptive Event

Investors Are Ignoring A Potentially Large Disruptive Event

The Dow Jones Industrial Average is solidly trading 200 points above the "Dow 20K" milestone, which may suggest that the market is healthy with no immediate tailwinds that can result in large scale panic. Investors who think this is the case might be mistaken, at least according to BK Asset Management's managing director of foreign exchange management Boris Schlossberg.

Across The Pond: It's A Bird, It's A Plane ... It's The British

Thursday's snap election in the United Kingdom is a potential market moving event that is flying under the radar, Schlossberg explained during a recent CNBC "Trading Nation" segment. The Conservative party, led by Prime Minister Theresa May, was at first expected to land an easy win and maintain its parliamentary majority. But the opposition, Jeremy Corbyn's Labour Party, has seen some momentum as of late and could do much better than initially expected.

"What we have here is essentially a consensus view that Prime Minister May was going to run away with this election," Schlossberg said. "Now she finds herself in a very very tough battle against an opponent who is hated by 80 percent of his own party."

May running a minority government will be perceived as a negative for the British pound and U.K. assets as the government will be in a much weaker position in future Brexit negotiations.

One of the more tried and tested laws of the stock market as of late has been that investors love predictability and hate uncertainty. A surprise outcome in Thursday's election could potentially disrupt the global equity and currency market — as has been the case immediately after the surprise Brexit voting results.

Related Links:

More Signs Brexit Fears Were Overplayed? UK Retail Sales Marked Fastest Pace Of Growth In 19 Months

Bank Of England To British Banks: Prepare For The Worst
Image Credit: By Ilovetheeu - Own work, CC BY-SA 4.0, via Wikimedia Commons


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