UBS: Navigating the politics of 2016

It’s easy to get hooked on politics. By March, still the early stages of the US presidential campaign, people had already viewed 110 million hours of election material on YouTube alone – equivalent to the time needed to work 75,000 full-time jobs. 

Politics has taken center stage around the world, with votes also approachingin the UK and Spain. Within two days of the publication of this letter wewill know the outcome of the British referendum on EU membership – avote likely to have significant shortterm effects on markets.

At such times it can be difficult for investors to hold their nerve. Plenty cuttheir equity positions at the beginning Navigating the politics of 2016of the year and didn’t return to the market – even as the S&P 500 ralliedtoward all-time highs. Some have moved to safe-haven assets like highgrade bonds, which are now more expensive than ever.

To those waiting for greater political clarity, I say “good luck.” Once the UKvote is out of the way, the upcoming Spanish election will be seen by manyas a mini-referendum on EU austerity policies. And in the US presidential race, the vote is already being presented to the American people and the world as a Judgment Day with far-reaching historical implications.

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