Weekly Market Commentary 12/08/2017

Ten years ago this month, the U.S. economy slipped into the deepest recession since the 1930s. What a difference a decade makes. To be sure, some firmly believe that bubbles are forming (bitcoin anyone?) that will soon deflate and bring the economy to its knees, much as the bursting of the dot.com and housing bubbles presaged the last two recessions. But any judgment as to whether assets are overvalued and/or when they might burst is debatable, to say the least. That said, the Federal Reserve has become increasingly concerned about speculative behavior in the financial markets and its potential consequences for the real economy. While not an overriding factor, the desire to curb undue risk taking by investors seeking to bolster returns has reinforced the Federal Reserve’s commitment to gradually lift short-term interest rates.