1Q 2019 Review After a tumultuous final quarter of 2018, the tenth birthday of the current bull market culminated in the best quarter since 2009. The Federal Reserve pivoted to a more dovish stance in early January sparking the powerful risk rally which spurred the S&P 500 to return over 13% for the quarter. The easing of financial conditions undoubtedly benefited risk assets. Progress on trade negotiations also buoyed market sentiment as trade war risk diminished. Stocks marched higher despite the lower rate of estimated earnings growth for the 1Q, as investors deemed this slower pace of growth transitory. Overall, the first 90 days of the year were the mirror image of the preceding quarter. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (“VIX”) fell by over two-thirds relative to its recent late December peak. The S&P 500 finished its roller coaster ride just 3% shy of its all-time high in a nearly straight line retracement from year-end.
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