December Market Update - Cycles Still Matter

The S&P 500 gained 3.4% in November. To further describe our current investment landscape Kathy Jones, Chief Fixed Income Strategist at Schwab Center for Financial Research, recently wrote, “Ever since the Federal Reserve reversed course and began easing policy, markets have enjoyed smooth sailing. It looks like it can last a while, since we don’t anticipate a shift in central bank policies any time soon. The problem is that market valuations become skewed in environments like this. Low interest rates and high liquidity encourage risk-taking and yield-seeking. Asset valuations become elevated and investors become complacent.” ECRI published an update November 19 titled Hard Data Still Decelerating. Lachman Achutan's news item is a must read for anyone studying the U.S. economy. Let's review price, sentiment and valuation as we start December.