Market Turbulence Commentary

Thomas Graffeo |


Market Turbulence Commentary

The start of this downturn on Friday stemmed from good news. The general economy reported too positive, and this was reflected in the job market being too strong and wages going up faster than anticipated. So, it’s more jobs, more employment and more people making more money. That’s really positive.

This “better-than-expected news” caught the bond market by surprise, and that is where the real problem lies. I made changes to my bond positions over the holidays in anticipation of such bond problems, which are proving to be great moves. The stock market also reacted a bit, but that was not too bad on Friday. I was actually buying after 12:30 PM on Friday for accounts with cash. Monday’s 1500-point mid-day move has all the indications of a margin call made by someone forced to sell to cover their losses. While we have seen some “wake turbulence” over the last couple of days, we are experienced to see through this. 

If fundamentals were “bad," I would be ready to move fast. What we are witnessing is market movement orchestrated by short-term traders. As a long-term investor focusing on the fundamentals, I just want more cash to invest at these lower prices. By perspective, we rolled back this year’s gains, but it’s only February. There is a long year ahead with a sound foundation. We made a similar move as recently as June 2016, where we wiped out the gains for the year with the pending election, and it’s been a good run ever since.   

Let’s be patient. Let’s look for more news. This is not an economic shift. This is just a blip. 

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results

The economic forecasts set forth in this material may not develop as predicted.