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Portfolio > Economy & Markets

Volatility Spikes on Europe Woes

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The markets opened lower, but bounced after good industrial production numbers at mid-morning.

Europe seems desperate to find a solution to their fiscal problems. Apparently, the slowdown in the continent is affecting Germany’s economy as well, as it showed almost no growth in the second quarter.

Recent volatility has caused market sectors to become highly correlated. This “risk-on, risk-off” behavior indicates that there is no way to create a single-asset portfolio that will withstand selling pressure. In our view, diversifiers like managed futures and Treasuries are essential if one wishes to reduce portfolio volatility.

While Europe stagnates, U.S. growth continues to slowly rebound. We expect to see improvements in the next few quarters and still believe that dividend paying equities are attractive compared to fixed income.

Even with today’s volatility, the greenback only managed a slight gain. We still expect to see a weaker U.S. dollar.


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