Risks Appear Tilted to the Upside for Stocks
Although economic data was positive and earnings continued to be strong, U.S. equities were mixed last week. Markets appear to be in a holding pattern, with investors waiting for more news on Federal Reserve balance sheet normalization and tax policy.
For several months, volatility has remained low while equity prices have grinded unevenly higher. This has prompted many investors to look for signposts that could cause a change in direction. Possible dangers could include the end of emergency zero-interest-rate policies, high global debt levels, slow productivity growth or political instability caused by such issues as widening income inequality or rising protectionism.
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