Over the past year, we’ve seen a shift in how the market reacts to economic news. Earlier, negative economic data like lower consumer spending or rising unemployment was seen as positive for stocks because it signaled that inflation might be cooling, leading the Federal Reserve to potentially cut interest rates. This was good for the stock market.
Now, however, the focus has changed. Investors are concerned that the economy might be weakening too much, raising fears of a recession, which would be detrimental to stocks. While no one can predict the future, our quantitative models utilize economic data points to help manage risk exposures.
Market’s Mood Swings
- We believe the preservation of capital is key to consistent, long-term investment success.
- Our investment approach is grounded in economic theory and backed by quantitative analysis.
- Managing drawdown risk is a pillar from which we build our portfolios.
60-Second Breakdown
Redwood Senior Analyst Michael C. Sasaki, CFA® discusses recent market performance and explains this week’s chart.
