August 24, 2016—The past 30 days have been the least volatile of any 30-day period in over decades. Only five days during the most recent stretch saw the S&P 500 index move by more than 0.5% in either direction, the lowest since the fall of 1995. 

We face a fractious political environment here in the U.S. that is likely to get even more contentious in the coming months, as well as a referendum in Italy (a vote on constitutional reforms that could determine the fate of pro-EU Prime Minister Matteo Renzi) that will garner more attention. Earnings season is essentially over and now traders are largely focused on the Fed (According to Bloomberg there is only a 26% chance of a hike in September as we await Chair Yellen’s speech on Friday).

Core narrative

Heading into the final days of August, we should expect post-Labor Day volatility to pick-up— perhaps considerably. As a result, our current neutral positioning is prudent and appropriate.

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Source: Bloomberg

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