On Monday of this week, our head trader and I spoke to a group of business owners, including some clients, at a CFO roundtable in Orange County. These are always some of my favorite meetings as we get to engage with entrepreneurs who are directly affected by the whirlwind of international events that we track so closely.

The discussion, of course, centered around how business is going now locally and how the global economy is affecting their companies.

It was fitting to get the news this week that California staked out a new place in the world by laying claim to the No. 6 spot in terms of the world’s largest economies. In international trade, California is responsible for 18 percent of total U.S. imports and 11 percent of total U.S. exports.

What is most interesting for business owners, of course, is how the second half of the year will play out. Granted, we have already seen some remarkable events this year – with a lot related to socio-political upheavals – and there are certainly more to come, with some distinct milestones along the way.

The first of these will be the plans by new British Prime Minister Theresa May for the separation from the E.U. and the invocation of Article 50 that starts the official exit process for the U.K. A lot of attention will be paid to her cabinet and leadership team and the first forays into how the Brexit process will be accomplished.

The second will be the Italian constitutional referendum in October. This is a vote regarding reforms sought by current Prime Minister Matteo Renzi. Though not technically a vote on EU membership or continued use of the euro, if this referendum fails it could cascade into a chain of events that might move Italy in that direction.

Finally there is the U.S. presidential election in November. But there’s no need to discuss that now since we are already inundated with coverage of this event and will be for months.

My View:  Although economic fundamentals do matter, the last half of 2016 will be greatly influenced, if not primarily driven, by socio-political developments. As we have already seen this year, such factors are extremely unpredictable and emotional.

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