Goldilocks reappeared last week with an extremely strong jobs report that gave stocks another reason to cheer the ninth birthday of the bull market.
Stock market volatility appears to be largely a consequence of the economic environment returning to a more “normal” status.
Every month in the immediate aftermath of the release of The Conference Board Leading Economic Index (LEI) I put together a small deck together for Schwab’s Operating Committee highlighting the overall data and some of the key takeaways.
In a record-breaking sprint from all-time highs to an “official” correction, the “short vol” trade unwinding exacerbates an initially fundamentals-driven decline.
Volatility has spiked, jolting investors out of complacency, but that doesn’t mean any dramatic action is needed.
In what was Janet Yellen’s final meeting as Fed Chair, rates were left unchanged, but the outlook for inflation was elevated in the statement.
Stocks have ripped higher to start the year and “melt-up” has become a popular descriptor; but it’s time to judge whether the flame’s too hot.
U.S. stocks may have entered a melt-up phase but for now it is relatively well supported by earnings growth; and although sentiment is extended, behavioral measures indicate still some skepticism. However, given elevated valuations, and the aforementioned overly optimistic sentiment, volatility is likely to increase and more frequent pullbacks are possible. The bull should continue to run, but likely with a bit more drama, so it’s important to stay diversified and disciplined around your long-term asset allocation.
Tax reform—or better put, tax cuts—should provide a boost to the economy, but some enthusiasm-curbing is in order regarding the details and timing.
Perhaps it’s premature (or even a jinx) to mention that if the S&P 500 ends December in the green, it will be the first time in history that U.S. stocks—as measured by that index—were up during every one of the 12 months.