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Is the Fog Starting to Lift?
The election is over but some uncertainty remains, which means bouts of volatility are likely to persist. The Fed is likely to hike rates in December but uncertainty about the path of rates in 2017 will persist. Additional uncertainty may come from elections around the world, with the potential for a continuation of surprising outcomes that could rattle markets at times.
Looking Past the Election
Stay calm and carry on. We believe U.S. earnings and economic growth will continue to support an ongoing bull market, but gains will likely be modest and pullbacks should be expected alongside political and monetary policy uncertainty. Globally, wage growth is picking up, but that doesn’t have to mean bad news for profits.
Get Ready for the End of the Summer Slumber
Volatility is likely to pick up and investors should consider using volatility to tactically rebalance around longer-term strategic allocations. We believe a near-term pullback is possible but that the longer-term bull market is intact. Individual investors are showing signs of returning to the stock market and investor behavior analysis suggests that may continue to aid a continued upward trend.
The Calm Before the….
The summer lull shouldn’t allow complacency to set in. We expect the U.S. bull market to continue, but risks remain and volatility is likely to pick up. But with a solid U.S. consumer, and modestly improving economic and earnings growth, we think the general equity trend will be higher. Although EM stocks have had solid summer gains, we caution investors against chasing returns and to rebalance as needed.
Schwab Market Perspective: Looking Beyond Britain
For the past couple of weeks the financial markets have been dominated by the results of a vote from a country that represents roughly 4% of world gross domestic product (GDP) according to the World Bank, and roughly 0.9% of the world population according to Trading Economics. It’s certainly not insignificant but does put some things in context. Financial markets, after a violent reaction to the shock of the vote for the U.K. to exit the European Union (EU), are putting a little context around Brexit’s aftermath as financial instruments have rebounded and shown stability in recent days. Uncertainty regarding economic growth in the U.K. and the rest of Europe will likely be with us for the foreseeable future, adding another reason for volatility to remain elevated, but that doesn’t mean investors should hide in a corner until things become more certain.
British Shock—What’s Next
The next several weeks could be a tumultuous time in global markets, and investors need to keep a longer-term view in mind. Global stock markets have tended to ultimately rebound from other sharp declines—often fairly quickly. It can be tough to get back on track once things reverse, so we recommend investors use volatility to tactically keep allocations in line with their long-term strategic targets.
Schwab Market Perspective: Summer of Discontent?
As amusement park visits rise in the summer months, the ever-popular roller coaster analogy seems appropriate for the stock market. Since the beginning of 2015, stocks have had some fairly major ups and downs, but we now sit about where we began. Unfortunately, it’s not as easy for investors to get off the ride, and we expect the frustrating, grinding environment to continue for the near future. Equities have yet been unable to break through to new highs, while fixed income continues to offer little in terms of yield.
Stocks Stuck in the Muck
The running-to-stand-still pattern in U.S. equities may continue, with bouts volatility expected. But U.S. economic growth appears to be improving and stocks could start to sniff out a potentially better second half for both the economy and earnings. Investors should remain patient, and use volatility as opportunities to rebalance around normal strategic allocations in both U.S. and international equities.
Corporate Caution…Global Recession?
Uncertainty among investors and companies has resulted in equities failing to push to new highs…for now. We remain fairly confident that stocks will reach new records, but patience in the near term is required. And selling in May doesn’t appear to be a great strategy for long-term investors as global yield curves are indicating low odds of a global recession. Perhaps hold in May is more apt. Bouts of volatility are likely to persist in light of uncertainty over Fed policy, the upcoming election, and global growth concerns.
Great Expectations!
Expectations and inflection points matter in investing, often more so than the overall level of any given data set. The besting of low expectations has helped stocks to move higher, but the bar has been raised so we continue to suggest a neutral allocation toward U.S. stocks. Globally, currency moves have played a large part in determining stock market action, and some calming in the currency markets could help stabilize global markets.
The Soft and Frustrating Middle
Patience and discipline. Those are the two words to commit to memory in the face of the current environment. A sluggish expansion and a cautious corporate environment leads us to have a neutral view on equities, which means investors should stick with their longer-term objectives and remain committed to their plan. There are glimmers of hope domestically and globally with strong U.S. job growth and U.S. and global manufacturing looking better.
What a Quarter! What’s Next?
The first quarter was the proverbial roller coaster, with stocks experiencing extreme volatility, but ultimately ending up back where they started. We continue to believe U.S. stocks are in a secular bull market; but in a more mature phase which will be dotted with volatility and pullbacks. Corporate earnings likely need to recover before stocks can move demonstrably higher. More clarity from the Fed and a better political environment would help, but both seem unlikely in the near term. However, a more dovish tone from the Fed has aided in some recent dollar weakening, which has boosted emerging markets’ performance. While it is an encouraging development, stay disciplined and diversified as we watch to see if global growth can improve.
Schwab Market Perspective: Sigh of Relief
Beaten down areas of the market have staged a nice turnaround. Stocks have moved well off the lows and the S&P 500 is now within shouting distance of the flatline for the year. Areas of the market that were some of the hardest hit—such as materials, energy and financials—have posted some of the best gains over the past month.
Schwab Market Perspective: Neutral Does Not Mean Boring
There are two ways to get to a neutral color: 1) just pick the boring beige that we’re all familiar with, or 2) mix a bunch of wild colors together and end up with an altogether bland sort of color—vastly different inputs but relatively the same result. Recently, stocks have resembled the latter scenario as stock indexes have moved out of correction territory but have remained quite volatile, with triple-digit Dow moves more common than not.
Schwab Market Perspective: Confidence is Key
There are many words that could be used to describe the first six weeks of 2016 with regard to stock performance but given that this is a family publication we’ll stick with frustrating. There have been rebounds, including the latest fierce recovery which has taken US stocks out of correction mode; but a lot of confidence has been shattered. These are the times that can make or break an investing plan. Our long-held mantra is that panic is not an investing strategy and that investing should always be a disciplined process over time; never about decisions at moments in time.
Watching and Waiting
Don’t just do something, sit there! Not panicking can be tough to do in times of increased volatility, but often the best advice to avoid emotional decisions. We continue to expect severe bouts of volatility at least until the trajectory of the U.S. and global economy is more definitive. In the meantime, the Fed is likely to become more dovish in the near-term, which could stabilize the volatility. Recent results for global PMI readings are relatively encouraging and certainly argue against the apocalyptic forecasts so prevalent today.
Looking for Answers
It can be difficult to stay calm during market declines, but reacting emotionally is rarely beneficial. Investors need to maintain discipline and keep long-term goals in mind. Risks have risen for the U.S. and global economy, but neither a domestic nor global recession appears to be on the imminent horizon. But oil likely needs to stabilize to stem some of the recent volatility. Stay calm, and don’t overreact to the short-term gyrations in the market.
Questions for the New Year
We continue to believe that U.S. and global stocks will continue to experience bouts of volatility and pullbacks; but a major bear market is likely to be avoided. Key determinants of the path stocks will take include central bank policy, inflation, currency volatility and earnings/valuation. We continue to reinforce the benefits of broad and global asset class diversification during a more difficult market environment.
Realism Returns
Stocks have pulled back after their rip higher in October, which we believe is healthy and in keeping with our expectation of continued volatility. The US economic picture is mixed, but the recent robust labor report boosted the odds of a December Fed rate hike. Finally, while difficult to think about financial matters in the face of such horrific events as the Paris attack, the resilience of both people and economies around the world should give us all hope for the future.
The Markets’ Teddy Bear
The sharp market gains seen over the last month are unlikely to persist at the same pace, and investors should be prepared for more volatility. Uncertainty about interest rates will persist, but the US economy continues to chug along at a decent, although not robust, pace. Similarly, global growth seems to be perking up, and helping to stymie predictions of an impending global recession. There are still pressures on global growth, but we believe the upside surprise potential in Europe should benefit stocks in that region.
Schwab Market Perspective: Bulls, Bears…and Hippos?
When trying to describe our view of the market, we realized that bullish and bearish were quite limiting and could cause confusion. Bullish, for example, could mean anything from skyrocketing markets to very modest gains—one word, very different environments. So, we are introducing a new animal descriptor that should more accurately describe our view of the stock market—the hippo. While not initially obvious, we think this is the perfect descriptor, and who doesn’t love hippos?
Fourth Quarter Comeback?
A disappointing year to this point for the US stock market has a chance to end on a better note, with good seasonality and a still-growing economy as supports. Consumers are in good shape, the Fed remains accommodative, and the much-larger service side of the US economy is still healthy. But Fed uncertainty, Congressional budget battles, and Chinese growth concerns will remain as headwinds and will likely contribute to continued bouts of volatility. Across the pond, the European fight against deflation appears to be working, although more QE may be needed, to the potential benefit of Europe/
Are the Bulls Regaining Their Footing?
Uncertainty surrounding the Federal Reserve continues after its punt of rate hikes at its most recent meeting. But as the market gets more clarity on monetary policy and given a still-growing US economy, the bull market should slowly reestablish itself, albeit with bouts of volatility. Further support should come from global growth in areas that are net beneficiaries of the plunge in commodity prices.
Schwab Market Perspective: Now What?
“Everyone has a plan until they get punched in the mouth.”—Mike Tyson.
We don’t often quote Mike Tyson, but his words resonate lately. Investors are wondering what to do—buy the dips, sell the rallies, or sit tight? First, investment decisions should never be made on emotion, which tends to dominate at times like this. It can be difficult to stomach moves such as we’ve seen recently. But investors who have an investing plan in place should indeed just sit there, let things calm down, and continue with the plan already put in place.
The Tortoise Wins Again?
The narrow trading range for US stocks continues, but there are some concerning signs such as seasonality and technical issues that make us a bit more cautious in the near term. We don’t think the bull market is in danger of ending, but there could certainly be a pullback and we don’t believe investors need to be in a great hurry to put money to work. In the immediate aftermath, China’s move on its currency rattled markets, but we don’t think it’s the start of a currency war, and hope that this is part of a herky-jerky path to freer markets.
Schwab Market Perspective: The Calm Between the Storms
Peak earnings season is behind us, Greece is not in imminent danger of exiting the euro, Europeans have headed out on vacation and the US Congress won’t be far behind. After a volatile start, the US market appears to be settling into a more typical summer pattern—for now.
Schwab Market Perspective: Slow Summer?!
Summer is supposed to be a time of slow trading, light news, and an opportunity for vacations. But the past several weeks have been anything but slow. Greece—a country representing 0.38% of the world economy based on gross domestic product (GDP), has dominated attention; China’s recent stock market plunge also dented sentiment among US investors. It’s meant the “running to stand still” characteristic of this year’s first half is persistent. In fact, the first half of the year saw the S&P 500 trade in its narrowest range in history.
Not Too Hot…
Despite the narrow range for US stocks this year, things can change quickly. We believe volatility will pick up over the next several months as we head toward the Fed’s initial rate hike. Across the pond, the best we may be able to hope for with regard to Greece is another “kick-the-can” solution. But any potential damage should be relatively contained due to the work done in the Eurozone over the past five years.
Tug of War
The current stalemate in the US market could continue for some time, with bouts of volatility and pullbacks expected as the market anticipates the initial rate hike. Be prepared by staying diversified and consider buying protection, but we would view such an event as the pause that refreshes and help set up the next sustainable bull run. Investors should also look overseas as the aggressive stimulus measures being taken by the ECB appear to be beneficially impacting the economy, and may help equities perform better in the coming months.
Schwab Market Perspective: As the World Turns
A market that grinds higher isn’t all bad as it allows time for earnings to catch up to prices; but complacency must be reined in. Sharp movements could and should come as we move closer to a potential Federal Reserve rate hike. We believe the US economy will rebound from the weak soft first quarter, helping to support stocks and a rate hike, but the turn needs to gain traction. Meanwhile, Congressional approval of fast track trade authority could pave the way for improvements in the Japanese recovery.
Watching and Waiting
Patience can be tough, especially in investing, but that is what is needed at the present time. While a sharp upward move in equities seems unlikely, and the risk of pullbacks is elevated; a grind higher is not something most investors should miss out on. Economic data and the Fed will continue to be in the spotlight, and we expect improvement that will lead to both a Fed rate hike and increased equity volatility—so be prepared. Across the pond, political uncertainty exists, but money supply should be the main focus, which could bode well for the possibility of future European equity gain
Schwab Market Perspective: Heads, Bulls Win; Tails, Bears Lose?
The bears can’t seem to grab hold of this market, but that doesn’t mean full-speed ahead for the bulls either. Grinding generally higher with increased volatility seems to be the course for now, but the possibility of a correction still exists. Diversification, discipline and patience is required. International equity exposure should be part of most investors’ portfolios, to a level commiserate with risk tolerance. European risks related to Greece seem to have lessened, while the Chinese stock market doesn’t appear grossly overvalued, although a pullback from the recent run is possi
Slip Sliding Sideways
Volatility will likely continue and more sideways action could be in store for the US equity market. We believe US economic data will start to rebound, helping push stocks higher in the second half of the year. The Fed remains in focus, but a rate hike is not likely until the latter half of 2015, which has helped slow the dollar’s upward momentum; potentially comforting the market and letting businesses better react. Better near-term opportunities may exist overseas as the Eurozone economy is improving and Japan seems poised to rebound from soft data.
Will a Spring Thaw Lead to a Stock Surge?
US economic data has been soft, repeating a trend we’ve seen in recent first quarters. But we believe growth will again bounce back as some of the temporary weights drop off. US stocks should continue to grind generally higher—but with heightened volatility—aided by better data and a still-dovish Federal Reserve. But investors shouldn’t ignore international opportunities. Global growth generally appears to be improving and foreign central banks are largely easing monetary policy, potentially benefiting risk assets.
Will Dipping Data Lead To Dramatic Drop?
US stocks have been resilient, although there has been an uptick in volatility. Economic data has shown some softening, but we believe it is temporary in nature. However, the risk of a correction is elevated in our view and investors should be prepared for such a possibility by having a diversified portfolio and keeping a close eye on rebalancing opportunities after pullbacks. Meanwhile, investors should also look overseas for global diversification opportunities as monetary policy easing should help to bolster asset values.
Rhyming…but not Repeating.
Stocks have recovered their January losses and have continued to move higher. While economic growth remains solid and we remain secular bulls, investors should be prepared for increased volatility and the potential for a near-term correction. Also, European stocks may be due for at least a pause and we suggest looking to add exposure to emerging market positions if needed. Staying well diversified and keeping an eye on rebalancing is the recommended strategy.
Self-Sustaining US Economy…So What Now?
The US economy appears to be in a self-sustaining phase of the expansion, which could mean more volatility as the Fed embarks on a tightening cycle. We remain confident the secular bull market is intact, but volatility has risen and we suggest investors who are over-exposed to US equities consider global diversification, with a preference for emerging markets. Europe appears to be stealthily improving, but Greece remains a flash point and Eurozone equity markets may have gotten ahead of themselves a bit.
Diverging Policies…Converging Economies?
The US economy should continue to expand but faces headwinds with weak global growth and a strengthening dollar leading to diverging central bank policies. Volatility has risen and the potential for a correction in the near term appears more likely. Nonetheless, timing the market in the shorter-term is dangerous, while the longer-term picture still looks positive for US equities. Across the pond, we remain skeptical much can be accomplished with the ECB’s QE program and continue to favor emerging markets over developed internationally. We also believe global diversification is becomin
Glancing Back but Focusing Forward
The US stock market appears set for further gains into at least the first half of next year, although risks are elevated with valuations no longer discounted and looming rate hikes. There is hope that ongoing easy monetary policy by global central banks can help to bolster economic activity is areas such as the Eurozone, China, and Japan. But we are somewhat skeptical about stock market performance in developed international countries and favor emerging markets to start out the New Year.
Rolling AlongFor Now
We remain optimistic that US stocks will likely continue to move higher, but warn against getting overly complacent as a pullback is always a possibility. The US economy is improving, the Fed is erring on the side of dovishness, and both corporate and consumer confidence are growing. The fall in oil should be a net positive for the US and global economy, and we are in a traditionally seasonally positive time of the year for equities. Global economies remain weak, but we are seeing a glimmer of hope from stepped up responses from foreign central banks.
And the Winner isInvestors?
The pullback seen in October is now just a memory and stock indexes are again pushing into record territory. Seasonality and the election cycle are lining up with still solid earnings growth and an expanding economy to help support further gains. Complacency is a risk but we continue to believe the trend in US stocks is higher.
Plot Twistor a Different Book?
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
Global Fears
Volatility could continue but equity investors should keep the longer-term picture in mind, which we believe is positive. The U.S. economy is improving and monetary policy remains quite loose. The international picture is more concerning but diversification is important across asset classes. We currently favor emerging markets within a diversified international portfolio.
Clear Sailingor Choppy Seas?
We are at a tenuous point in the market seasonally speaking and a pullback is quite possible. We dont recommend trying to time a potential correction, however, as that is virtually impossible and exposes investors to missed upside opportunities waiting on the sidelines. Elsewhere, the international picture looks a little shaky, but diversification is important and we do favor emerging markets within an international portfolio.
World Cup and World CPI Are Heating Up, Risking Mistakes by Key Players
by Jeffrey Kleintop of LPL Financial,
Just as the World Cup has been heating up, increasing the risk of player mistakes, the world consumer price index (CPI) has also been heating up, complicating the task for policymakers at the worlds central banks and increasing the risk of mistakes that could have market implications.
Results 151–200
of 200 found.
