Updated: Dec 10, 2019
Markets tend to go “up the escalator” and “down the elevator”, a scenario we are seeing now. We emphasize that we see no signs of a recession on the horizon.
Instead, solid fundamentals, being a synchronized global economic expansion with stronger earnings growth resulting from tax reform in the U.S. continue to underpin the markets. We are not witnessing panic selling, rather profit taking after the recent melt-up in the S&P 500.
Further contributing to market action this past couple of weeks is the unwinding of positions in short-volatility funds. The market needs to enter a period of digestion of recent volatility.