From Chief Investment Officer Tom Veale,
Reporting on the Wind Conditions doesn’t change the wind’s strength or direction. I think the same is true of reporting on Market Risk. However, we will take actions based upon wind conditions that might make our day go better. This should be possible relative to market risk as well.
This week’s Market Risk Indicator is steady at the lowest end of the “Caution” territory. Looking back, we see it’s been much higher than it is this week. The overall trend of the S&P 500 has been flattish for about a year while the MRI has held a relatively steady risk level. Managing the SignalPoint Portfolio Strategies needs to be done with caution and yet needs to be responsive to opportunistic potentials. This cautious but opportunistic activity can be observed over time in this histogram example:
This modus operandi is used with all of our SignalPoint portfolios. We continue to watch for trend changes in a market dulled by previous excess and current worries. In the meantime, our portfolio management model continues to work to keep the portfolios healthy.
This week’s Market Risk Indicator value is again 33 and again with an MRI Oscillator value of +1. No significant changes were seen in the MRI components this week with one cautious, one proactive and two neutral. We continue to see convergence of the CPI Inflation Rate and the current 13 Week Treasury Rate.
CPI Inflation seems to be tapering off as interest rates rise. History shows the short term treasury rate to be above inflation by a point or so. This hasn’t been true of much of the first 23 years of this Millennium. Possibly we’ll see a return to market driven short term rates.