Macro factors are coalescing in a way we haven’t seen in years to produce the perfect storm of potential Volatility, and the VIX is just hovering around medium to long-run averages suggesting a potential swell could be incoming. Advisors should push clients to strategies that can avoid volatility rather than trying to guess this uncertainty. The best option may just be options; a covered-call strategy is a great way to avoid volatility. Investors can lean into betting on medium to long-run growth and sit out excess volatility. This strategy has setbacks particularly if stocks over-perform, so advisors and investors need to carefully monitor the futures market to take full advantage. 

Finsum: Now is a great time to take advantage of anti-volatility strategies, yes they don’t have the long-run games but they have strong protections for market volatility. 

Inflation may be peaking, or at least that is what Treasury bulls are thinking. A rally started at the 20-year note and worked its way to shorter term rates this week: the 30-year yield fell 13 basis points and the ten-year yield fell by 12 basis points. Declining yields were driven by investors flooding into these treasury markets. Still, investors are pricing in a half-point rate increase by the Fed in the next two meetings with an almost 100% chance of reading the tea leaves in the options markets. The rally was really suppressed by Bank of America’s Forecast which said inflation peaked in March and will be on the decline. Similar patterns took place on the long end of the government bond market in the Euro areas as well with Germany and the U.K. seeing their yields fall.

Finsum: The flood in the TIPS market suggests that bond investors still see some persistent inflation in the near term. 

Cherly Young, a financial advisor and team based in Los Gatos, CA is planning on leaving Morgan Stanley and joining First Republic. She’ll be taking her $17 million in annual revenue and a giant $2 billion book with her. Her all-star status and revenue generation has put her in the upper echelon of California Advisors and ranked her #84 on Barron’s nationwide list. First Republic has put in a lot of effort on building a high-end advisor base, and they have offered a variety of incentives to get there. Still their sales force is a fraction of Morgan Stanley’s which boasts 16,000 brokers, and is still touting positive recruiting results. 

Finsum: Many financial firms are forcing full time in-office work, and First Republic sees remote pitch as a part of their campaign, while MS is caping remote work at 90-days. 

The average investor is scared of market conditions and as a result we have seen various measures of sentiment plummet, but now could be the exact moment to hit the dip and ride a bull wave. The first reason is the Bull/Bear ratio which was a 1.12 which below two is buy territory and approaching or below one is a strong buy. The other reason is comically low sentiment which usually proceeds a booming period. While inflation fears are rampant, core inflation took a strong movement in the right direction which means that the Fed won’t have to tighten as much. Finally, the pandemic is starting to show sings of trickling out, and while new variants are spreading each subsequent new variant has had a smaller impact and been less lived. This could be a huge win for supply chains which could trickle into lower inflation and much higher growth.

Finsum: There are early signs of optimism for stocks and bonds; the time to strike could be very soon.

The most recent week of April saw a mass exodus in the global bond market as investors were fleeing in concerns of economic growth. Based on a report from Refinitiv Lipper investors dropped $14.5 billion in bond investment, over ten times the losses from the previous week. Ten year treasury rose sharply to a near three year high, which sent bond prices falling. While inflation is rampant, March actually saw a little bit of relief in core prices as inflation was mainly driven by food and energy. One area of bond funds that hasn’t seen investors scared off is inflation protected funds which are on their seventh straight week of gains and inflows. More concerning than just the tightening cycle is the growth that could result in overtightening which could send the economy reeling. 

Finsum: This could be the bottom of the bond market, investors should prepare for a little bit of a rally if supply chains free up.