This Week in the Market
With Scott McCaghren and Tony LaPorta
Major U.S. indices have rallied nearly 3% since our last weekly commentary. Volatility has remained ever-present; however, there has been one noticeably lacking difference: There has been little verbiage from the White House regarding trade/currency wars or the upcoming Fed Funds rate announcement. As of today, the treasury/equity markets are pricing in an 88.8% probability of a .25 rate CUT.
Monetary stimulus has accelerated worldwide which has resulted in many parts of the globe enduring a negative interest rate environment. We actually have several analysts that believe the U.S. is not far behind from jumping into that same boat. This will have mixed results: 1. Monies on deposit will suffer and 2. Investment monies likely will benefit.
We bring this up in today’s commentary to point out one simple fact that is largely based on the upcoming Fed decision. With economic numbers heating up, unemployment data near historic lows and a stock market that is back to all-time highs; HOW IN THE WORLD DO WE CUT INTEREST RATES! Obviously, there is something looming in the distance that Mainstreet has not been privy to yet.
The good news is that we have positioned the portfolios for this very uncertain and volatile investment landscape that we find ourselves in. We firmly believe in the volatility hedge that has been implemented for a majority of the year now. We have bought and sold it several times for profit but also very mindful of the dire necessity to have it in the portfolios. During the upswings in the market, that hedge will create drag on the performance. During the downswings in the market, it protects your hard-earned monies. You WANT this hedge on right now especially considering that Sep and Oct are the worst performing months of the domestic equity markets.
As always, we continue monitor all equity, treasury, commodity and currency conditions in order to efficiently deploy capital as well as protect invested assets.
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