The end of 2014 brought yet again an increase in market volatility, angst surrounding global economic growth, and continued unease about the longer term central bank strategies and actions. Several key points are worth highlighting:
- Volatility in the stock market has picked up in the past few months. Concerns about global economic growth, the health of emerging markets, geopolitical tensions, and plunging oil prices have investors on edge.
- Investors continue to rotate toward defensive sectors such as consumer staples, health care, and utilities, helped in part by the steady decline in long-term interest rates. More cyclical sectors such as basic materials, industrials, and technology are falling out of favor.
- The US economy continues to improve at a below normal but nonetheless growing pace. It is hard to find another area around the globe in the same condition. Europe has stalled, Russia is close to a depression with the collapse of their currency, and their number one export, oil, is down 50% in US dollar terms.