Video: Promising signs amid the volatility

Apr 13, 2020 | By Brian Levitt, Global Market Strategist


Hi, this is Brian Levitt, Global Market Strategist with Invesco. The last days have reminded us of the efficacy of policy even in times of great uncertainty. And it reminds us that perhaps being long-term short in this type of an environment is betting against science, human ingenuity, and really betting against policymakers. And it continues to be why I'm positive on markets one year from now.

The broad US market is now back where it was in March 2019, that's up 25% since the March 23 bottom this year. Seven of the best 30 days of the last 25 years really just happened. The volatility index has been half US Treasury volatility half, tighter credit spreads and a decline in portfolio correlations. So, all of these are good signs and showing us the efficacy of policy.

Now we've been deploying a market bottom indicator. This is going to be things like extreme volatility, oversold conditions, lopsided positioning. And they've all flashed, suggesting that perhaps we may have seen the market bottom. Now don't get me wrong. Volatility is going to persist. We’ll retest lower levels likely. But many of the classic signs of a market bottom are in place.

What we're looking for now and what everybody needs to be hoping for is a catalyst for that next market move. And that's where we deploy our new cycle dashboard.

The cases seem to be bending in some places. So, there's hints of good news, whether it's Spain, Germany, New York. Financial conditions are easing a bit. So, all of that is a good sign, but we still have some room to go.

So, conclusion, we're obviously in a much better place. We would expect near-term volatility, and markets are likely to be higher a year from now, and we’ll recover over the next bunch of years. Thank you very much.

Important information

The opinions referenced above are those of the author as of April 13, 2020. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions.

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