Welcome Fall…
There is a change in the air. Fall is now in full swing; schools are back in session, football on primetime, and comments from Janet Yellen’s Federal Reserve Board are dominating the press.
Signs of a sanguine economy are dissipating from the headlines, and words like “volatility” are in vogue, yet again. Affirmation of growth in the US, such as job growth beating expectations, the upward revision of Q2 GDP and the strengthening US dollar, have been overshadowed by the developing concerns regarding the global economy. Welcome fall, welcome…
As we head into the fourth quarter, the market remains in flux. In the third quarter the US markets ended up 1.1%, the international markets down 1.4% and the 10-year US Treasury at 2.5%. The recent sell-off ensued post the Federal Reserve meeting in mid-September, and the month of October has built upon that uncertainty.
Removing the Punch Bowl
Aside from some dovish comments, the third round of quantitative easing (QE) will wrap up at month-end. When QE 1 and QE 2 ended, bond yields and equity prices declined in tandem. Remember; as bond yields go down, bond prices go up. While the US economy is stronger now than in 2010 and 2011, the risk of an economic downturn associated with ending the stimulus is still ever-present. If the Eurozone falls into an outright recession, the risk to the US economy will increase even further.
This short-term “volatility” we are experiencing could still continue depending Fed’s response to the recent drop in interest rates. All eyes will be on Janet Yellen once again. In the words of Humphrey Bogart, “Here’s looking at you, kid.” We will see if Janet gives the market what it wants.
Standing Fast
We remain cautiously optimistic and will work to maintain the appropriate risk zone for your portfolio. We understand that the recent market movement may be unsettling. Your strategy is based on long-term economic truths, adjusted for today's environment. We will continue to assess the markets and data as it comes and will proactively make adjustments for you if necessary, to further diversify risk and seek investments that do not parallel the same risk as the broad market.
Housekeeping Items
You will receive an e-mail invitation from Black Diamond coming soon. Black Diamond is our performance reporting software that allows you to monitor the performance of your accounts. Going forward, your quarterly reports will be posted on the Black Diamond site. You may continue to receive paper reports if you would like. Please activate your login when you receive the Black Diamond e-mail.
We appreciate the continued confidence you have placed our firm.
Warmly,
Eric Lai & John Wenzel
Archvest Wealth Advisors
Eric Lai & John Wenzel | Archvest Wealth Advisors