While the S&P 500 Index hovered near bear market territory on Tuesday before reversing course, I was at the New York Stock Exchange to discuss volatility and gold with Bill Griffeth on CNBC.
Sue Herera, Tobias Levkovich (from Citi), and I talked with Bill about expectations, fundamentals and technicals in the market, addressing what was on everybody’s mind: Will stocks go lower? I don’t believe they will, based on historical data and understanding the difference between what’s normal and what’s extreme volatility. Emerging markets and oil have been severely discounted by investors and are considered oversold. I would expect a reversion to the mean to take place, meaning the odds are in favor of a rally.
The markets have been trading on fear lately because of government policies, not on fundamentals. For example, it’s very positive that during the last quarter, 700 companies held in the S&P 1500 Composite Index had more than 10 percent revenue growth.
At the close of the market, I came back on CNBC to touch on the factors that are poised to drive the increase of the gold price over the next several years, including negative real interest rates and central banks’ interest in holding the yellow metal.
See our discussion on CNBC now.
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Chicago Board Options Exchange (CBOE) Volatility Index (VIX) shows the market’s expectation of 30-day volatility. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The S&P 1500 Composite is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600. The index was developed with a base value of 100 as of December 30, 1994.The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
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