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The Paris Attacks and Financial Markets

| November 17, 2015
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The series of coordinated terrorist attacks that shook Paris on Friday have left at least 129 dead and hundreds wounded. Our thoughts are with the victims and their families in this difficult time. Coming after suicide bomber attacks in Beirut on Thursday and the possible bomb-related downing of a Russian charter flight in October, the attacks have highlighted the global threat posed by ongoing violence in Syria, Iraq, and Afghanistan.

American officials were quick to announce that no "credible threat" exists against U.S. targets, yet the global conflict has many Americans anxious. As attention turns to analyzing the attacks, experts around the world are already concerned with the financial, economic, and security implications of these new threats.

How might this affect the financial markets? There is no way to know for sure how a single event will affect markets. While we don’t expect large shocks to the financial system as a result, we do expect some smaller impacts, including the possibility of:

  • Volatility in financial markets around the world is likely as investors react to geopolitical uncertainty and the expectation that western nations may take a more active role in overseas conflicts.
  • Oil may experience a rally as investors hedge their bets against further instability in the Middle East.
  • U.S. Treasuries and other so-called "safe haven" investments may see interest as investors seek shelter from uncertainty.
  • The Euro may drop against the U.S. dollar and other currencies because of increased headwinds.

We may see a short-term negative reaction, but over time, we expect the usual trends of the economy and corporate profits to reassert themselves. CNBC, quoting analysts at JPMorgan said, “As long as the Paris attacks are not the start of a sustained campaign, our judgment is that the macroeconomic consequences will be limited and short-lived.”

We just wanted to take a moment with this note and express our solidarity with the citizens of Paris and the world at large who share our values of peace and freedom. We are also grateful for you and the trust you place in us to manage your financial situation during world events like this.

If you have any questions or concerns, please reach out to us. On our end, we continue to monitor world developments and we will keep you posted as appropriate.

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