Q3 2024 / Strategy Update

Volatility returned to markets at the outset of the third quarter. On one of our regular Zoom calls with clients and in a monthly email newsletter, we cited rising interest rates in Japan and the unwinding of a massive “carry trade” as the impetus for selling pressure. At one point, the CBOE Volatility Index (VIX) reached 65.73, the third highest level behind only the 2008 Global Financial Crisis and the 2020 Covid-19 crash. 

We remained calm. 

Our real-time analysis of the event led us to the conclude that this was likely a sentiment-driven correction, not a deterioration in fundamentals or some massive dislocation in markets. Fortunately, the selling pressure didn’t last long. 

U.S. stocks charted a “w-shaped” recovery, which we attribute to strong earnings growth and stable economic fundamentals. Many key positions in the Core Strategy completed the round-trip back to positive territory in Q3, and we’ve been pleased with the momentum that has carried into October.