Volatility

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Benign Economic Environment, Low Market Volatility

By Zhiwei Ren | August 10, 2017

Low volatility has been the hallmark for this year’s market. We have seen the lowest level on record for the volatility index (VIX) and the lowest realized volatility in the S&P 500 Index. The reason we have such low volatility in the market is clear: The macro environment is very benign and investors know it.

Credit Conditions Easing in the Face of Tighter Monetary Policy

By Mark Heppenstall | May 18, 2017

The Federal Reserve (Fed) Bank of St. Louis provides investors a weekly gauge of financial stress in the markets with its publication of the St. Louis Fed Financial Stress Index. The Index is constructed using 18 different financial market indicators: seven interest rate series, six yield spreads and five others indicators, including equity and fixed income market volatility. Readings above zero indicate above-average financial stress while values below zero suggest below-average financial stress.

Quiet but Risky Market for Investors as Low Volatility Persists

By Zhiwei Ren | April 20, 2017

The equity market has been very quiet so far in 2017. Year-to-date, the S&P 500 has posted a daily decline greater than 1% only once (on March 21), and the realized volatility for S&P 500 has reached the lowest point in the last 50 years.

The backdrop for the low volatility is widely recognized: the U.S. economy is growing a little above trend, a new pro-growth president was elected, inflation is rising but still remains low, the risk for a hard landing in China is lower, Europe and Japan are growing at the fastest pace post-crisis, and most importantly, low inflation allows the Federal Reserve (Fed) to intervene whenever we have some volatility in the market.

Stocks Pull Back on Trump Administration Policy Concerns

By David O'Malley | March 27, 2017

Last week was highlighted by the Republicans’ failure to repeal and replace the Affordable Care Act (ACA). The policy setback was not well received by stocks, as the U.S. markets suffered both its worst day and week in 2017.

The Value Trap

By David O'Malley | February 21, 2017

In this short trading week, I will be watching to see if we get any more information on the Federal Reserve’s (Fed) current thinking when they release the January meeting minutes this Wednesday. If U.S. economic data remains strong, I expect the Fed to increase interest rates by 25 basis points at the March meeting. Also of interest this week is the expected release of Berkshire Hathaway’s earnings and Warren Buffett’s annual letter on Saturday, which to me is a must read.

Despite Its Volatility, Stay the Course with Energy

By Trevor M. Williams | January 5, 2017

Like most products and services, the price of oil is a function of supply and demand. During periods of extended oversupply, the price of oil tends to fall.

What the Brexit Vote Means to U.S. Investors

By John Swarr | June 23, 2016

The European Union (EU) referendum vote tonight has created a series of unknowns for investors. The first unknown is whether or not the U.K. remains in the EU. Should the U.K. vote to leave the EU, investors will face a second set of unknowns.

Bumps in the Road for Consumer Loan ABS

By Jason Merrill | May 12, 2016

Lending Club’s troubles are a microcosm of the potential pitfalls that await the many banks, investors, and servicers that have rushed into the consumer lending space.

Record-Breaking Warm Weather Adds Volatility into Year End

By Jason Merrill | December 17, 2015

Warmer-than-average temperatures across the eastern half of the country are weighing heavily on energy-related commodities.

Is It Time to Panic, or Is It Time to Buy?

By Mark Heppenstall | August 27, 2015

The markets have been roiled over the last few days, driven largely by news from China. The question on everybody’s mind: What does this mean for my investments?