Crossing a River Filled with Crocodiles
In the month of October, the equity markets had its best month in several years after rebounding from a sharp correction in August. The catalyst for the rally came from comments by ECB president Mario Draghi indicating that more stimulus or quantitative easing could be in store. This drove the so-called “Santa-Rally” as all risk assets rose across the board sharply in a short period of time. In addition, new comments from Fed during the month raised the possibility of a rate hike before year end. As a result, the bond market sold off and risk assets further rallied as this signaled a vote of faith in the strength of the economy.