By James Dondero | December 14, 2015

  • Last week demonstrated a tone of “risk off” in the markets, as investors prepare for the potential of rising interest rates from the FOMC for the first time in 10 years. Both stocks and high-yield bonds were off sharply, in favor of the relative safety of US Treasuries.
  • While the bears have clearly wrestled the ball from the bulls, the question now is whether or not they can move it down the field. Several key canaries such as the Value Line Index and Dow Jones Transportation Average remain weak, and suggest they do have a chance.
  • Looking overseas, developed markets (such as those in Europe & Japan) are also finally starting to feel the impact from stress in the credit and emerging markets. While still in better shape than the BRIC’s, what happens in the BRIC’s could be key going forward.
  • Finally, the reason for all the volatility could be fears over global deflation, which certainly seem founded given the weakness in commodities and strength in the US Dollar. Sentiment is getting quite extreme however, and stabilization in copper & crude would go far in calming markets globally.


The views and opinions expressed are for informational purposes only and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice. There is no guarantee that any of the forecasts will come to pass. Past performance is no guarantee of future results.