Brexit Commentary

by Jim Kuntz on June 27, 2016

The United Kingdom’s surprise vote last week to exit the European Union rattled financial markets around the world.  Stocks, currencies and commodities felt the brunt of the emotional knee-jerk reaction to the news. Friday’s selloff erased gains from earlier in the week, when polls were suggesting a victory for the Remain alternative. U.S. stock markets finished the week down approximately 1.5-2%.  As money flowed out of stocks, most of it landed in the safe havens of the U.S. dollar and Japanese Yen, in addition to gold, while demand for U.S. Government and other sovereign bonds rose dramatically. Fortunately, our financial portfolios’ diversification helped mitigate the stock market declines. Investments in bonds, managed futures and gold appreciated in value as money exited stocks.

On Friday, June 24, 2016, The Wall Street Journal aptly stated; “The implications of Britain’s vote to leave the European Union will reverberate through the Continent’s politics and economy for years.”  The U.K. vote certainly caught investors off guard; as many analysts suggested a better than 80% probability of a Remain outcome. The Brexit, however, is really no different from many of the exogenous geopolitical events that have disrupted financial markets over the course of our 34 year history managing wealth. This is another example of an unexpected event that causes investors to react emotionally, and the result is a large amount of immediate market turmoil.   The financial pain caused from this turmoil is real, unsettling and can stir those emotions of fear.  However, over the long term, history has shown us time and time again, through world wars, revolutions and an extensive list of other types of disruptions, that markets are resilient and eventually right themselves to find equilibrium.

Pacific Wealth Management’s disciplined wealth preservation focus, proactively reduced stock market allocations in anticipation of an event like Brexit. We expect more uncertainty and market volatility as we move through the summer. We continue to plan and prepare for what lies ahead to help our client’s financial goals become reality.


This commentary contains forward looking statements and opinions. These opinions may not develop as predicted. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

Market Commentary from Pacific Wealth Management

by Jim Kuntz on June 22, 2016

Since January of 2015 U.S. stock investments have experienced some significant ups and downs and, now 18 months later, are sitting today at around the same levels.  As we described in our last commentary, the financial markets in 2016 have wrestled with conflicting expectations for growth and inflation.  Globally, economic growth has slowed while the central banks of Europe and Japan continue to print money and buy their own government bonds in the hopes of creating stronger economic growth and stubbornly elusive inflation. As anticipated, the near term market outlook remains quite cloudy, with anemic corporate profit growth, the imminent Brexit vote that will decide if the UK will leave or remain in the European Union, in addition to a very unsettling presidential election landscape in the U.S.  All these factors continue to create a lot of uncertainty for investors.

We have discussed on numerous occasions how the financial markets become uncomfortable with uncertainty and the resultant increased levels of volatility.  U.S. Treasury bonds and Sovereign Government bonds have been the “safe haven” place to hide from the recent drama and uncertainty. Throughout the world today there are approximately $10 Trillion of sovereign government bond debt with negative interest rates.  The negative interest rates in European and Japanese bonds have encouraged more investment into our relatively higher yielding U.S. Government bonds.  These conservative bond investments have been appreciating in value again this year and delivering healthy returns, as U. S. bond yields move lower.   10 Year U.S. Treasury bond yields are down to levels we last saw in 2012. Gold has also been a beneficiary of this year’s uncertainty regarding the global economic outlook.  Recently gold has been consolidating its gains from earlier in the year.

The world economy has been resilient to shocks over the past several years.  Recent reports on energy demand indicate the global economy should continue to expand slowly.  This increasing global demand for oil and gas has been helped by countries like India, which has overtaken China as the main source of oil demand growth.  India is expected to surpass Japan in 2016, becoming the world’s third largest consumer of energy behind the United States and China.  Our research suggests oil prices are likely to be above $50/barrel at year-end.  Our energy infrastructure investments in pipelines and storage facilities are benefitting from the rebounding oil and gas prices and performing well this year.

As the leading economy in the world, the U.S. is benefitting from the solid underpinnings of low unemployment, wage growth and consumer balance sheets that have been boosted by the improvement in home prices and stock market values.  Household spending and retail sales, in our consumer services focused economy, are increasing.  Despite tepid manufacturing industry performance and declining business spending, most economists expect the American economy to continue growing at around 2% this year.   Many of the present uncertainties should be resolved as we move into the latter part of 2016.  Investors are likely to see easier year over year corporate profit comparisons together with resolutions to the concerns we noted above, especially clarity on the next President of the United States.

We hope you have plans for some fun in the sun this summer.  Please call us if you have any questions regarding your wealth planning or the financial markets.


This commentary contains forward looking statements and opinions. These opinions may not develop as predicted. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

PACIFIC WEALTH MANAGEMENT ANNOUNCES NEW FINANCIAL ADVISOR

May 20, 2016

DEL MAR, CA, May 20, 2016 – Pacific Wealth Management®, an independent wealth management firm providing intelligent solutions for affluent investors, today announced that Nicholas D. Castellano has joined the firm as a Financial Advisor.  With the firm continuing to grow, Mr. Castellano will be expanding Pacific Wealth Management’s retirement planning services for high-net-worth business […]

Read the full article →

Financial Market Comment

April 20, 2016

Investors who only check market prices at the end of every quarter, may easily conclude the first three months of 2016 were uneventful, as stock market values finished March relatively close to where they began in January. However, as you are likely aware, global stock markets in early 2016 were unusually volatile, declining over 10% […]

Read the full article →

Financial Market Comment

February 29, 2016

As February winds to a close, the financial markets continue experiencing higher than normal levels of volatility. Since our last update in January, global stock markets have ridden a rollercoaster mostly tied to the ups and downs of oil and gas prices. The significant decline in energy prices have certainly resulted in earnings setbacks for […]

Read the full article →

Financial Market Comment

January 19, 2016

We hope you and your families had an enjoyable holiday season and were able to find time for some relaxation and fun. The financial market volatility in 2015 was challenging, but the start to 2016 has been decidedly worse. Stock markets around the world have declined sharply to begin the year with multiple triple-digit down […]

Read the full article →

Market Comment

December 8, 2015

We hope you enjoyed your Thanksgiving holiday and have plans for more fun, rest and relaxation as the holiday season continues and 2015 winds to a close. This year has been challenging for investors as nervous financial markets continue experiencing uncomfortable levels of volatility. Declines in stock market values over the summer were initially precipitated […]

Read the full article →

Market Comment

September 30, 2015

The financial markets continue to experience significant volatility as they grapple with slowing emerging market economies, interest rate uncertainty and declining commodity prices. China remains at the forefront of Wall Street’s radar screen and has been the primary driver of the stock market’s recent correction over the last few months. Although China’s growth rate has […]

Read the full article →

Market Comment

August 21, 2015

The financial markets are experiencing some of the highest levels of volatility we have seen in recent years.  The currency sell-offs in emerging market countries have sparked global growth concerns as China’s manufacturing-based economy’s rate of growth is slowing.  When China moved last week to devalue their yuan, they surprised the world’s markets and increased […]

Read the full article →

Market Comment

May 22, 2015

With Memorial Day right around the corner and the warm summer months approaching, we hope you are doing well and planning some fun with family and friends. The financial markets in 2015 continue to roller coaster up and down with the news reports of the day. We began the year with another extremely cold and snowy […]

Read the full article →