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Strategy Video: How Complacency is Keeping the S&P 500 and Dollar Buoyant

Strategy Video: How Complacency is Keeping the S&P 500 and Dollar Buoyant

John Kicklighter, Chief Strategist

Talking Points:

• The markets are suffering a sense of complacency - a sense of satisfaction for current conditions

• We have seen just this past week warnings from numerous authorities on economic and financial health

• Participation and activity levels are unlikely to rise with complacency, but will certainly spike as it collapses...

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The markets are suffering from a sense of complacency. It is 'suffering' because the disparity between positioning and future circumstances poses a ballooning risk. This past week, the IMF, the Federal Reserve, the OECD and other officials have issued warnings on the outlook for the global economy and the excessive exposure to 'risk' in the financial markets. Yet, these sentiments have done little to put off higher-return-higher-risk benchmarks like the S&P 500 and Yen crosses. Expectations that the masses will simply overlook these issues and maintain both bearings and existing positions has also curbed volatility and volume. When the serenity finally breaks, both the distant fundamental floor and shift in activity will spell an extreme shift. We look at circumstances and trade opportunities in complacency - and when it fails - in today's Strategy Video.

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