Fed Speaker Monday
After last week's Fed statement, the market will be looking for some additional
insight when Fed Vice Chairman Stanley Fischer speaks Monday. From MarketWatch:
It is likely to be standing room only at the Council on Foreign Relations
on Monday as the market strains to hear Fed Vice Chairman Stanley Fischer's
latest views on the economy and interest-rate policy. "Obviously Fischer
is going to get a fair bit of attention, coming so soon after the January
statement and with a fair bit of question of what they meant," said Michael
Hanson, economist at Bank of America Merrill Lynch.
The Most Important Story Of Our Investment Lifetimes
This week's video features the "three legs of the stool" story. The story
focuses on three market myths and the impact on the psychology of global financial
markets.
Investment Implications - The Weight Of The Evidence
Given the damage done to the market's risk-reward profile in January, it is
too early to determine the significance of Friday's big rally in stocks.
The charts below show similar points during the dot-com bear market and financial
crisis bear market. Takeaway number one is each bear market (or correction)
is unique. Takeaway number two is not too many good things happen when the
50-day (blue) is below the 200-day (red) and the S&P 500 is below both
moving averages. In the 2000-2001 example, stocks did not find a bottom for
another 18 months. In the 2007-2008 case, stocks remained in a downtrend for
an additional 9 months.
As noted in this week's video, ugly looking market profiles can begin to improve
at any time, which means it pays to remain highly flexible and open to all
market outcomes (bullish and bearish). Given what we know today, cash, some
currencies, and bonds (IEF) continue to offer a better longer-term risk-reward
profile relative to stocks (SPY).
