Weekly Commentary, 10/26/15 – 10/30/15
The Federal Reserve surprised no one when they decided to leave rates on hold following their two-day meeting that ended on Wednesday. However, this statement made clear that a rate increase will be on the table at the next Federal Open Market Committee meeting in mid-December. The statement following the meeting provoked less concern over global markets than the September statement. The strongest reaction was in the currency market, where the U.S. Dollar Index jumped nearly 1%. Yields on the 2-year U.S. Treasury Note, the issue most sensitive to Fed expectations, increased 6 basis points, achieving a one month high of 0.71%. The benchmark 10-year note rose 5 basis points to 2.09%
NASDAQ finished the week 0.43% or 43 basis points higher, while the other major U.S. indexes closed the week close to unchanged. For the month, global equities experienced some of their biggest monthly gains in years. The S&P 500 rose 8.3%, the EURO STOXX 50 rose 10.24%, and Nikkei 225 climbed 9.75%. In a sign of lagging breadth, the Russell 2000 (a measure of small cap stocks) only rose 5.63%. Other technical indicators measuring breadth and relative strength are improving, but not nearly at the rate of change we are experiencing in price. The one-month surge in price we saw in October has taken the market to overbought levels and well into the trading range that was established earlier in the year. Some might expect the market to consolidate after such a big move up in October before continuing higher or retesting the double bottom established in the fall. We don’t know what the market direction will be after October’s impressive performance, but we believe our strategies are properly positioned for the current risk in the market.
The Stadion Managed Account Risk objectives are managed using a “core/satellite” approach. The core positions will comprise 40-60% of the portfolio and are invested in equity, fixed income and money market instruments with the strategic allocation becoming more risk averse as the risk tolerance of each fund changes. In allocating the objective’s satellite assets the remaining 40-60% of each portfolio, Stadion uses a proprietary, rules based weight of the evidence model. The portfolios remain invested per the risk objective.
Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources that Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock price. The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies. The Nikkei 225 is a price-weighted stock market index for the Tokyo Stock Exchange and is the most widely quoted average of Japanese equities. The EURO STOXX 50 (SX5E) Index is Europe's leading blue-chip index for the Eurozone and provides a blue-chip representation of supersector leaders in the Eurozone. The index covers 50 stocks from 12 Eurozone countries. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. The Sharpe ratio measures the excess return per unit of deviation, or risk. Any references to specific securities or market indexes are for informational purposes only. They are not intended as specific investment advice and should not be relied on for making investment decisions.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.