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Uncertainty often coincides with increased market volatility, but that hasn't been the case lately.

Volatility Remains Low

Over the past several years, uncertainty has risen considerably across the globe. Today, there is no shortage of policy issues that create an element of uncertainty - the U.S.-China trade war, Brexit, central-bank policy shifts, and the impeachment inquiry, to name a few. These events have been key catalysts behind the Global Economic Policy Uncertainty Index reaching its highest level since its inception (1997), but investors have been surprisingly stoic thus far and volatility has been relatively limited.

Why has market volatility remained low? We believe that these headlines all pose elements of risks, but, at least domestically, the economic expansion remains intact (despite the recent signs of softening), and that has helped to keep volatility in check. Certainly, the Fed's decision to cut policy rates has helped. Furthermore, the primary engine of economic growth - the consumer sector - remains relatively strong as we discuss in a recent commentary.

Against a backdrop of rising risk, investors should be prepared for the possibility for volatility to increase. But, as history shows, risk is also a double-sided proposition. Investors should also not discount the potential for resolution (or even progress) on any of these issues to create a relief rally.  We've certainly seen that before.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.