January 2019 Commentary

What a difference a month makes. While December found itself in the conversation for the “worst month ever”, January represented the polar opposite with stocks rallying in an aggressive and unrelenting fashion throughout the month. Amusingly, the violent swings in equities can best be explained by changes in sentiment rather than changes in any particular fundamentals as we believe investors have chosen to swing back and forth between optimism, pessimism, back to optimism again despite no substantive change in the backdrop. Of course there have been some changes to economic numbers but nothing that warrants a 15% round trip in stocks. Traders’ obsession with the language used by the Federal Reserve of the U.S. has reached a fever pitch with the new interpretation being that Powell the uber-dove will keep the cheap money spigots open forever while signaling a potential reduction of the balance sheet normalization program the Fed had undertaken.

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