Has anyone seen the punch bowl?After a remarkably calm stretch from mid-July to Labor Day, market volatility returned in a big way in the second week of September, prompted once again by the actions (or lack thereof) on the part of major central banks.
The rally we love to hate.Market rallies can be the stuff that try investors’ souls. On the surface, rallies are good news, but look deeper and you’ll find investors filled with uncertainty over how long the rally will last or whether the bottom might fall out altogether. The uncertainty then leaves investors forced to hesitatingly dip their toes into the market waters (or wade deeper) as prices grind higher.
Uncertainty and financial markets are inexorably connected. Every market situation has those elements of risk that cannot be measured with precision—a fact that is equally disconcerting and exhilarating at once. We have been lamenting the uncertainties around economic growth and earnings too weak to lift markets, while also regarding with interest the embryonic evidence of a slightly steeper growth path emerging in this quarter. The Atlanta Fed’s GDPNow estimate of 2Q GDP is reading 2.