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Market Commentary

September Monthly Market Commentary

A Glass Half Empty


Despite being portrayed as dismal scientists, we economists are not always pessimistic about economic prospects. In fact, we are happy to report that things are looking up in many respects. Consumers are spending again, factories are revving up operations, housing activity is on a tear and, most importantly, the job market is recovering. The health crisis that has thrown the economy into the steepest contraction since the Great Depression is far from over. But the nation is slowly adjusting to its ill effects, fitfully reopening for business, and hundreds of vaccines are in the pipeline, boding well for widespread inoculation sometime next year.

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August Monthly Market Commentary

The Recovery Enters Perilous Stage


The rebound in jobs, production and consumer spending in recent months strongly indicates that the recovery from the harsh COVID-19 recession is underway. To be sure, the recovery may be cut short if the escalation of virus cases in many parts of the nation turns into a full-blown second wave or if the lapsed fiscal relief is not replenished with some additional government aid in the coming weeks. The vigorous rebound in key economic measures give the false impression that the economy is healthy enough to stand on its own two feet. It is not. The fuel for the growth engine is running out and it is only a matter of time before its cylinders begin to misfire as long as the health crisis is not effectively dealt with.

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Weekly Market Commentary

October 19, 2020


As if we haven’t had our fill of October “surprises,” this week’s batch of data provided another round of mixed messages that make the art of forecasting an economist’s nightmare. On the one side, you have a pandemic that shows no sign of letting up, with COVID-19 cases accelerating to the highest level in more than two months. With cold weather and the flu season about to descend on the nation, the health crisis continues to cast a dark cloud over the economic landscape, imparting downside risks into every economic forecasting model, including that of the Federal Reserve.

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Weekly Market Commentary

October 13, 2020


Well this is certainly not turning into a stress-free autumn, a season in which gently falling leaves should offer solace to a population agitated by a devastating pandemic. Yes, the foliage season is still very much part of nature’s plan, as its vibrant colors are poised to reach peak intensity in the coming weeks. But what nature gives to sooth the soul, mankind is equally adept at keeping the pot stirred. The past week has seen enough nerve-wracking events to keep heads spinning through what promises to be a highly anxious winter.

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Weekly Market Commentary

October 5, 2020


News that President Trump tested positive for the Coronavirus on Friday overshadowed what normally would be the headline-grabbing event of the day, namely the all-important jobs report. With the health crisis making a direct hit on the White House, the uncertainty surrounding an already tumultuous election will only grow more intense and add another source of volatility to the financial markets. As it is, the markets entered the last day of the week keenly focused on whether Congress would pass another relief bill before going on recess to help an economy that is clearly losing momentum. While negotiations were still in process on Friday, the window of getting anything done was rapidly closing.

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Weekly Market Commentary

September 28, 2020


It was another tumultuous week in Washington, highlighted by the controversial move by Republicans to quickly appoint a Supreme Court justice to replace Ruth Bader Ginsburg following her death over the weekend. In the current highly-polarized environment, this is another battle that is inflaming tensions and perhaps could affect the outcome of the election. From a macro perspective, it also dims the outlook for a pandemic relief bill that many believe is critical to sustain the recovery. As Senator Roy Blunt (R.,Mo) so aptly put it, “there’s just not enough oxygen left in the room to get that done.”

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Weekly Market Commentary

September 21, 2020


The Federal Reserve placed a megaphone over the bully pulpit this week, shouting as loud as it can that monetary policy will do whatever it takes to keep the economy on the recovery track. There was no ambiguity in the statement following the policy-setting meeting that concluded on Wednesday, nor in the comments by Fed chair Powell in his post-meeting press conference. Simply put, the Fed’s forward guidance was clear: interest rates will remain at rock-bottom levels at least until the end of 2023 or when the job market is fully healed and inflation rises to above two percent for a period of time. If that doesn’t do the job, the central bank has other tools at its disposal to maximize its effort, including ramping up asset purchases, utilizing lending facilities and putting even more oomph into its forward guidance.

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Weekly Market Commentary

September 14, 2020


The abrupt reversal this week of the stunning 37.5 percent surge in the S&P 500 may or may not mark the beginning of the end of the torrid market rally that began on March 23. Before Friday’s modest comeback, the benchmark index had contracted by 7.0 percent, just short of the 10 percent that would place it in correction territory. It’s unclear if the setback reflects a widely anticipated adjustment from an overbought condition, as many analysts believe, or something more fundamental that will play out in coming weeks. Many pundits have lost their shirts, not to mention their reputation, by making firm, but misguided, assertions that they know which way the market is heading.

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