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Market Envioronment

Market Envioronment

March 03, 2020
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Wow, just wow!

It feels like we are in no mans land with this current market downturn. The 10-year treasury has broken below 1% for the first time in history after the Federal Reserve lowered rates by 50 bps, which I have to say feels a little desperate. With the wild moves and extreme volatility, the market is moving in unprecedented ways, certainly historic by any measure.

I hear some market commentators ask, "whats the problem? equity markets have only fallen back to where they were a few short months ago. Well, it matters because the move is coming on the back of  Fed driven liquidity all-time record market highs. All with huge volatility, extremely high volume, massive levels of debt,, a spike in credit spreads in addition to a list of other things.

During sudden market events such as the current coronavirus outbreak, our 3-mandate strategy is designed to respond to this type of price action with an inherent hedging strategy in order to protect capital and smooth out the market volatility. Sometimes it is all about risk management.

This is a much bigger conversation, but I need to run and grab a quick bite to eat before futures open up in 43 minutes.

All my best,

Michael