Will the economic data warrant another interest rate cut? After a volatile week, investors turn their attention to the economic calendar for direction. Find out more from Sendero’s Vice President of Research and Strategy, Amaury de Barros Conti.
After a rapid shift in preference last Monday, investors are leaning towards stocks in companies seen as cheaper over riskier assets. Find out more from Sendero’s Vice President of Research and Strategy, Amaury de Barros Conti.
Hear about how slightly slower hiring in August may lead to more Federal Reserve interest rate cuts from Sendero’s Vice President of Research and Strategy, Amaury de Barros Conti.
We are officially in the longest bull market in history and know that market rallies can’t be sustained forever. So, what happens next?
There are two main scenarios to think about when a market starts to unwind: market correction and bear market.
A market correction is a 10% drop from a previous high. Investors should not try to time the market. Corrections can be scary, but they are actually frequent, necessary and a normal part of investing. For example, the S&P 500 Index suffered a correction in 2016 but ended the year up 9.5%.
A bear market is a 20% drop or more from a previous index high. Bear markets are the most prolonged market deterioration measure used by investors. Officially, a bear market is declared when an index falls to those levels for a period longer than two months. In 2008, the S&P 500 fell over 20% in the period ranging from January 2008 to March 2008, and an official bear market was declared. Economic growth held up for a few months but turned negative soon after the market deteriorated. The stock market is often a leading indicator of the economy.
A recession is connected to economic slowdowns, which usually consist of two consecutive quarters of negative GDP growth. Recessions have little to do with the market itself but can have an impact on overall investor sentiment, leading to periods of market stress. These conditions usually last about 6–18 months, anything longer than that is called a depression. For example, GDP declined in the last two quarters of 2008 and the first two of 2009. This is technically what an economic recession represents. Furthermore, it is possible to have an economic recession without a bear market and vice versa.
How does this affect your portfolio?
At Sendero, we understand the importance of asset allocation and the benefits of a prudent approach to diversification. It is important for investors to be prepared for times of negative returns by setting long term goals. In addition, creating a portfolio tailored to meet your expectations and mitigate risk will help you navigate the market with peace of mind.
Following Labor Day Weekend, find out how new economic data may impact the Fed’s upcoming rate cuts from Sendero’s vice president of research and strategy, Amaury de Barros Conti.
Every quarter we publish the current opinions of the Sendero Investment Committee on various asset classes used or considered for client portfolios versus their strategic allocation. This report reflects the current opinions of the Sendero Investment Committee on various asset classes used or considered for client portfolios versus their strategic allocation. The comments reflect opinions as of the specific date listed above and can change quickly based on market conditions. Tactical Asset Allocation – July 2019
The biggest change from 2018 so far is the Fed’s dovish shift. At their last meeting in June, the Fed signaled a readiness to ease policy on interest rates and the market is pricing rate cuts later this month and September. Low inflation readings and continued trade uncertainty are accommodating factors for the global central banks to provide support to the financial markets. Read more…
Since recovering earlier this year, oil prices have vacillated between $50 and $65. Concerns over supply from Iran and Venezuela have turned to concerns over demand from threats of further trade disruptions and slower global economic growth.
However, earlier this month, Iran shot down a U.S. drone and crudes price jumped as tensions have increased and reinjected a “Middle East” risk premium. We have maintained that as an investor in energy and oil-related equities, you have to be a geologist, an economist and a geopolitical expert. Read more…