A Message About Today’s Market Volatility (Dec. 3, 2015)
CEO Michael W. Conway discusses today’s market volatility.
Good afternoon, everyone. I wanted to reach out today after a volatile day in the markets. A couple of key issues are at play. First, it’s looking more likely that the Fed will raise interest rates in a couple of weeks, despite the fact that they keep saying the hike will be data dependent. Second, Mario Draghi announced that the European Central Bank would continue its massive bond-buying program to the tune of 60 billion euros a month all the way through March of 2017. International markets showed great disappointment, wanting even more to feed what has become a global addiction to stimulus. As I said in a recent television interview, the world of monetary policy has become a tale of two cities as the Fed postures to finally raise rates and the European Central Bank continues on with its quantitative easing program.
At the end of the day, I hope the Fed finally raises rates to at least begin the process of normalization, but I know that the Fed knows the risk of raising rates in what some consider an unstable economic environment. The last time U.S. manufacturing numbers were this poor, the Fed actually went the other way and injected more money into the system. We will have to see how this all plays out. We’re in a time where the benefits of all this Monopoly money for both the Fed and the ECB have run out of steam. We believe markets could remain choppy as markets await or absorb action from the Fed, but we believe our clients are well diversified for such an environment. As always, please call us if you have any additional questions. Have a great night.