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A Market Full of Sound and Fury

March 31, 2016

Assessing the Significance of Recent Equity Volatility

In late December, we wrote with a high degree of conviction that we expected difficult and erratic markets to until oil prices stabilized. We also felt that the minor rise in interest rates by the Fed, along with their misplaced confidence in the strength of the economic recovery in the U.S., was scaring the markets.

By mid-February, things had changed. Oil prices began to stabilize and then rally. Remarks from Fed officials became much more benign. As oil rose in price, so did hope that the recession in manufacturing was bottoming. Fears about banks and their energy industry loans subsided. Many stocks recovered from their lows.

Where does that leave us? In the past, we have referred to our three determinants of stock market direction: earnings, interest rates and psychology. The best or worst markets occur when the three are in sync, either positively or negatively. 

Hersh Cohen

Co-Chief Investment Officer, Portfolio Manager
49 Years experience
49 Years at ClearBridge

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  • All opinions and data included in this commentary are as of March 31, 2016 and are subject to change. The opinions and views expressed herein are of the portfolio management team named above and may differ from other managers, or the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Neither ClearBridge Investments nor its information providers are responsible for any damages or losses arising from any use of this information.