There are three dominant issues at play for the economy and financial markets, and they all circle around the theme of uncertainty. The first issue is the timing and pace of interest rate increases. The second issue is stock valuations and volatility. And the third dominant issue involves both inflation uncertainty and the possibility of recession. We have been discussing these topics for a while, but what is changing is the order of prioritization and the degree to which they are contributing to investor uncertainty and market volatility.
On episode 6 of Decision Dialogues, Mark Willoughby speaks to Karen Keatley, herself a Principal and Wealth Manager at Modera. Karen's firm, Keatley Wealth Management, merged with Modera at the beginning of 2020. Karen
If I had predicted in early April that just three months later, stocks would have rebounded and recouped most of their losses, you would have laughed at me. Yet, here we are. During the second quarter, there was a complete turnaround in sentiment, reflecting rising optimism for a vaccine for the COVID-19 virus and a nascent economic recovery.
This week, the global financial markets got sick as a result of the coronavirus. Major U.S. stock indexes have declined about 8% over the past week while international stocks have fallen about 6% (2/18-2/26/2020). Hardest hit were stocks of companies that are related to travel or those that rely on components that are manufactured in Asia, such as technology companies and automotive manufacturers, as well as some retailers.
For many months, the recurring theme in the news has been the economy: when will we experience a recession or bear market and how bad will the downturn be? Unfortunately, the economic commentary has, more than ever it seems, become infused with politics. The political noise makes it hard to maintain a clear-eyed, objective view of where we are economically.