In the wake of Brexit, eight years after the onset of the great financial crisis, now seems an apt moment to reassess a few economic themes. At PIMCO we do not foresee Brexit leading to calamity for markets or the global economy. Furthermore, even before the historic vote, we had determined at our annual secular-focused investment forum in May that middling global economic growth is likely to continue for the next few years, but with greater risks to the status quo.
Here I would like to expound on what some of these risks to the status quo could be, with a particular focus on seven “left tail” outlier risks. While none of the potential tail events are our base case over the typical investable horizon, these scenarios are worth considering in a time of insecure stability, if only because they offer an alternate viewpoint to market consensus.