Despite Market Volatility, U.S. Economic Growth To Continue 3

These shifts should lead to a continuation of their business cycles, increased corporate earnings growth and jobs creation, and higher stock prices. However, as markets have recovered from their December crash extremes, risks are pervasive, and we think investors should approach the markets with risk in mind.

The Cash Indicator

The Cash Indicator (CI) has declined to a level more consistent with historical norms. This points to a properly functioning market and lower risks. In December, the CI once again reflected higher market risks, but not to a level suggesting a significant reduction in market exposure. We think that the movement in the CI through December’s selloff and January’s rally is consistent with how the CI was designed to work.

Despite Market Volatility, U.S. Economic Growth To Continue 4


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Index Definitions:

S&P 500 Index – This Index is a capitalization-weighted index of 500 stocks. The Index is designed to measure performance of a broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.