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A volatile time ahead

Posted: Aug 16, 2013 11:12:03 AM

We are beginning to enter a short term cycle of uncertainty and volatility.  The problems will be policy oriented rather than economically oriented.  In the upcoming months we will have a debt ceiling debate and a fight over the funding of Obamacare, either of which could potentially shut down the government.  

Additionally, the Federal Reserve, after their meetings in September,  will probably start tapering their purchases of Treasuries. The problems that have been ebbing and flowing from the Middle East are sure to cause volatility as well.  The markets do not like uncertainty, and with all the issues at hand, uncertainty is there.  With all that being said, equities are  fairly valued , and we do not see a major dislocation happening in the markets. Any further downturn will most likely rebound by the end of the year, albeit probably not to the tops we reached earlier this month.  It is important to remember that markets do not go straight up without some healthy corrections.  Assuming we will go through a corrective phase, this will not be permanent or long-lasting.   

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