Last month, we highlighted the noticeable divergence across global financial markets. Essentially the only asset class to make it back to its January high, and go on to set all-time highs, has been U.S. equities. Everything else – well, they haven’t come even close.
The S&P 500 managed to climb a global mountain of worry to exceed its prior high set on January 26th. While almost every major asset class around the world seems to be coming unhinged, the domestic markets remain steadfast. And in a world of interconnectedness, it is even more surprising to see the divergence between the U.S. and the rest of the world.
For most financial markets around the world, the past few weeks have brought a sense of calm and renewed complacency. Domestic and International equity markets ground higher throughout much of July. The VIX fell 20% in the face of a market that quietly marched upward.
If you’re into symmetry, then you would find beauty in the S&P 500’s chart during the month of June. The index closed 0.48% higher for the month, but it was a near perfect return to May’s closing value as measured in both time and price.
U.S. equity markets looked poised to finally break out of several months of consolidation. Within the first two weeks of May, the VIX fell nearly 20%, while the S&P 500 gapped above April’s highs, the Russell 2000 got back to all-time highs and the 10-year U.S. Treasury yield remained under 3%.
The resurgence of volatility has been on the forefront of everyone’s mind. And, April looked to be a continuation of this newfound volatility. On the very first trading day of the new quarter, the VIX blew out to an intraday high of 25.72, which represented a 28.79% increase over the previous close.
March was a microcosm of the first quarter. The S&P 500 made its monthly high within the first third of the month. It then traded sharply lower, only to bounce back but not enough to close higher than where it started.
Coming into February it was well documented how equity markets in the U.S. and around the world were shattering records daily. The low volatility and one-way nature of stocks led many financial pundits and high-profile money managers to claim this time is different….
January was certainly an exciting month. And as I write this column, the first couple days of February have been even more so. If it weren’t for the last few days in January, the S&P 500 was on track to annualize a return…
Go figure – one of the most volatile times in 2017 for the U.S. equity markets occurred in the last few minutes on the last day of the year to trade. Over the final 25 minutes, the S&P 500 dropped 12 points…..