THE MORE THINGS CHANGE THE MORE THEY STAY THE SAME
Last week was supposed to be the week that we broke out of the range and had volatility return to the market. There were certainly plenty of data points to grab hold of for both bulls and bears. The horrible GDP report, while weather impacted, was so bad that it gave us pause to review our strengthening growth thesis. Of course, market memories are short, and the strong employment report(s) solidified that spring is in fact springing in the jobs market, albeit with a few dandelions popping up on the lawn, which downgraded the report to good, not great. Yet, despite all of this market moving data, we remain range bound with volatilities down to year-to-date (YTD) lows for most global asset classes. We supposed that the most “consensus” event last week was ultimately the most important one: the FOMC meeting, which effectively stayed the course as 90+% of the world expected. The continuation of tapering is certainly a nod to the strengthening economy, while low for long provides a continuation of dovish policy for an economy that continues to fall short on a number of measures. Yellen simply reiterated this position in this week’s Congressional testimony, where she decided to highlight the Committee’s concerns, such as uneven employment gains and weakening housing trends . Continue reading…