Tony Crescenzi at PIMCO has written a useful piece. He argues that current "market volatility has been rooted in a phantom rate hike from the Federal Reserve".
- In markets the anticipation of an event can invoke the same response as the real thing (market participants seek to discount the future)
- In 2015, market volatility has been rooted in a phantom rate hike from the Federal Reserve
- the Fed has been ringing a bell to warn markets that it is on the verge of raising interest rates
- Anticipation of the Fed's rate hike isn't the cause of market volatility, it has been a catalyst
- Biggest fallout from the Fed's phantom rate hike has been in China
- We believe markets are likely to remain volatile while they adjust
There is much more at the (ungated) article and its worth a read in full: In 2015, Volatility from a Phantom Rate Hike
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I particularly like his separation of cause and catalyst. For many, many years (years!) we've been hearing dire warnings of a stock market correction, for example. In brief, these warnings have been ... wrong. Sure the pieces were (and still are to a large extent) in place to cause a correction but it needed 2 things ... cause to build further, and then a catalyst. And thus, in 2015 we finally got the long-awaited correction.
I have noted in the comments on this site here the people discussing the distribution we were seeing in stocks leading up to the correction. That was nice work. You know who are.
