While the markets may have put the Greek saga behind us in July, or further down the road so to speak, China has moved to center stage. The U.S. stock market has stayed in a narrow range for much of 2015, but volatility has returned this month as investors became increasingly concerned about a potential slowdown in China’s economy and after China surprisingly devalued its yuan currency.
From the 2011
correction until this recent downturn the markets went over 1000 trading
days without a 10% decline. Stock markets are good at occasionally
reminding us not to expect prices to go up in a straight line. One of
the clichés about the stock market, “stocks take an escalator up and an
elevator down”, seems appropriate today. I believe the markets are now
in a process of finding the right floor to begin stabilizing.
there is a silver lining in all of this global market volatility is the
Federal Reserve will most likely delay it’s plan for raising interest
rates in the near term. In addition, weakening commodity prices,
especially oil, may give the Fed more room to leave interest rates lower
for an extended period. Low interest rates and low inflation is
ultimately beneficial for the U.S. consumer and therefor the U.S
economy. I expect in the near future these points may start to help
stabilize the U.S. stock market.
While volatility can be
frustrating, it’s wise not to get caught up in “knee-jerk” reactions.
After the volatility we have just experienced, though, it can be hard to
stay on track. As an advisor and portfolio manager I’m here to help my
clients stay on track. Please let me know if you'd like to discuss the
current market outlook and it's potential impact on your portfolio and
Nadim "Joe" Nahas, CWF®, AIF®
August 24, 2015