At the beginning of the year the financial markets felt like a continuation of 2017. The tone since February feels considerably different, as more “typical” volatility has returned and is now the norm.
Last week the major stock markets declined the most in 2 years, with investors fearing a trade war between the U.S. and China. This week the markets, so far, are attempting a rebound with investors realizing the current trade issues may be more about appearance than actual policy shifts.
In our February comment, we described the U.S. and Global economies as appearing on sound footing, with inflation looking contained, corporate earnings solid and interest rates rising only modestly.
With our U.S. Federal Reserve Bank and new Chairman, Gerome Powell, raising Fed Funds interest rates last week, we have more affirmation the American economy is continuing to strengthen. Overall interest rates are still at historically low levels and remain so, given the economic and inflation trends. We do not believe rates will rise sharply in the near term.
While the ongoing daily drama emanating from the White House certainly adds to the political uncertainty, we feel the downside market reaction should be relatively limited.
Your investments are constructed to weather these higher levels of volatility, which will likely continue throughout 2018.
Please feel free to contact us if you have any concerns or questions.
James C. Kuntz, CIMA®
Mark C. Hill, CFP®, CDFA®
Co-founder, Wealth Advisor
Justin C. Kuntz, CFP®, CDFA®
Director of Financial Planning