As we manage risk in real-time, we are watching our dashboard of indicators to alert us if the Fed goes too far in tightening monetary policy. Our indicators include weekly jobless claims (e.g. layoffs) and the growth rate of the amount of cash moving through the economy, which can be an early indicator of panic and cash hording by consumers, banks, and other institutions. Collectively, these data points can act as an early warning system to a U.S. Federal Reserve induced recession and equity market decline.
Until these signals suggest otherwise, we think that the current business cycle and bull market can continue to run for years.
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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.