Now that summer is over and everyone is back to work, we enter the historically volatile period of September and October. This year is unique, because the risk markets have seen significant declines during August.
Last week's solid August employment report sets the stage for a September Fed rate increase. With the unemployment rate falling to 5.1%, a level that we haven't seen since early 2008, the labor market continues to improve.
The global monetary imbalances caused by the Fed tightening, a slowing Chinese economy and the weakening of emerging market currencies will most likely accelerate market volatility into the Fed meeting. I look to remain short U.S. equities, treasury bonds and risk markets for the next few weeks.
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