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Market Review for 2/6/2018



What Happened?
The market was chaotic this morning as investors tried to digest what happened over the previous few days.  As time went on, and anecdotal evidence suggested volatility and algo traders pushed the market fall into overdrive, markets slowly became more orderly.  Uncertainty remained until about 2PM when a more confident bounce began, lasting until the close.  The real test will come tomorrow as it is likely that European and Asian markets will follow the US’s lead.  After that happens (assuming it does), this will be the last tailwind the US has at it’s disposal.  At that point, investors must decide which direction to go – is the market a continuation of 2017 where everything is good, or is it a more cautious market where uncertainty, inflation and interest rates are higher.
 
I’ve included today’s returns along with the two-day returns (S&P +1.77%, Eunoia 0.43% today – S&P -2.40%, Eunoia -1.10% over 2 days) to give some comfort that Eunoia is weathering the storm without trouble.
 
The Plan
There is no real change of plan or expectations.  Risk is higher and caution is warranted.  However, volatility also brings opportunity.  If I can find a safe(ish) way to capitalize on the market’s uncertainty, all the better.  If not, I’m happy to remain cautious and not swing for the fences just yet.
 
As always, call or email with questions or concerns.
 
Benchmarks
S&P 500 +1.77% (-2.40% over 2 days)
NASDAQ +2.13% (-1.73%)
Barclay’s US Aggregate -0.31% (0.08%)
MSCI EAFE +2.03% (-2.20%)
Emerging Markets +3.01% (-0.40%)
Eunoia Custom +0.92% (-1.15%)
 
Volatility
Volatility -17.12% (60.54%)
 
Eunoia Composites
Total +0.43% (-1.10%)
Taxable +0.19% (-1.01%)
Qualified +0.66% (-1.48%)
Externally Managed +0.67% (-1.44%)