Tuesday, September 10, 2019

Investment Perspectives: The Bear Trap, Negative Yields, and Range-Bound Market

Key Takeaways
• Stocks hold on during recent bouts of volatility.
•Find out why negative-yielding debt is not likely to hit U.S.
• Can overall economic strength carry us through a typically rough September?

In this month's issue:

The Bear Trap of Too Much Risk Aversion - Mark Luschini
Our central case has been, and remains, that the U.S. economy is on firm footing. Therefore, the chatter of a looming recession is premature. However, market participants have registered their concerns about the threat of recession via the recent volatility in the stock market.

Negative Yields Are Not Coming to the United States Anytime Soon - Guy LeBas The August 2019 Investment Perspectives included discussion on negative-yielding debt across the world. Although only a month has passed since that time, the total of negative-yielding debt has increased to roughly $16 trillion, from the $14 trillion we reported last month. Some portion of that increase is already negative-yielding debt sliding further into the negative (that process increases the market value of negative yielding debt, and our measurement is based on market values), and some portion of that increase is freshly negative-yielding debt.

Range-Bound Market Keeps Going - Greg Drahuschak 
No matter where you turned last month, there was no escaping news about trade and interest rates. In half of August’s trading sessions, the S&P 500 Index ended 1% or more from the prior session’s close, often because of trade- or rate-related news. The Dow Jones Industrial Average (DJIA) closed 300 or more points from the prior day’s close nine times, highlighted by declines of 767.27, 800.49, and 623.34 in the DJIA respectively on August 5, 14, and 23.

You can read the full Investment Perspectives here.