Caught between uncertainty and easy money

BlackRock
By September 6, 2019 07:53

Caught between uncertainty and easy money

Easier financial conditions have lessened the blow of greater political uncertainty. Can that continue?

Stock prices have spent August caught in a tug-of-war. On one side: increasingly accommodative central banks and easier financial conditions. On the other side of the rope: rising economic uncertainty driven by a quickly deteriorating trade situation. As I write this in late August, uncertainty is winning this month. That said, this is not 2018. Accommodative policy is helping to cushion both the economy and stock market.

In late July I highlighted the role financial conditions play in equity market volatility. As discussed, the market is vulnerable when investors have no reasonable way to assess future policy. However, while stocks are no longer “tweet proof”, easier money is helping dampen the reaction.

So far, the pullback in equity markets is similar in size and magnitude to May. In both instances, equity market volatility, as measured by

BlackRock
By September 6, 2019 07:53

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