The Market Sell-off

The market has been noticeably more volatile during the last two weeks during a sharp downward trend. But how much of this is reflecting the strength of the economy? The ISM Manufacturing Index, new jobless claims, and UM's Consumer Sentiment are as strong as they have been since 2008, and the fact that the Federal Reserve is becoming relatively more hawkish suggests the economy is strong enough to withstand less monetary stimulus. So where is this volatility coming from? Some possible reasons include uncertainty over how and when the Federal Reserve will tighten monetary policy, the discussion of a international bank tax, and the potential bailout of Greece. Most of these issues will probably take several months, if not years, to resolve.

Group 5