Weekly Market Commentary 08/24/2018

Despite a week that saw a barrage of explosive political news, the financial markets continue to adopt a “what, me worry?” attitude, as stock prices hit new highs and the bull rally by some measures is now the longest on record. For now, traders and investors see little connection between the trials and tribulations surrounding President Trump’s former associates, Cohen and Manafort, and the forces that determine asset prices. Some are noting the contrast with 1998, when President Clinton’s travails unfolded amid a spike in market volatility punctuated by the Fed’s decision to temporarily reverse course and reduce interest rates. But that era was marked by other disruptive events, particularly the Asian and Russian crisis that led to the collapse of a major hedge fund, Long-Term Capital Management, which posed an existential threat to the financial system. No such external threat is currently on the radar screen.