4 Low-Beta Value Picks To Beat 2H15 Volatility

Placidity has ruled American equities for a long time now, with the S&P 500 Index having gone 6 years without a meaningful pullback. In recent months, this lull has become even more pronounced, with the broader markets being locked in a very tight range. However, we all know that fear doesn't last forever, and neither does complacency.  

When markets look markedly serene, some event – such as the so-called Grexit – will crop up, resulting in volatility rebounding. The CBOE VIX index jumped 34% on Monday on Grexit fears as the S&P 500 lost 2.1%. And yet, it remains significantly below its long-term average.

Bull markets are inclined to become more volatile as they age, and this nearly-seven-year-old bull market is well past the average.

The second half of 2015 has a lot of potentially unsettling events lined up, even as curtains are drawn from the ubiquitous Greek drama. Let’s discuss what could make or break the markets in the coming couple of quarters.

The Guessing Game of the Fed Rate Hike

Wall Street continues to play a guessing game over the timing of the first rate hike by the Federal Reserve in almost a decade. The Fed policy statement has done away with all calendar guidance for the same. With June (the former favourite in the guessing game) out of the running, September has emerged as the next best bet for an interest rate liftoff.

The Federal Reserve’s data-dependent approach to interest rate policy indicates that if consumer demand continues to expand over the next quarter, the Fed might set in motion a data-driven shift towards normalization. However, shifting investor sentiment and global developments might continue to complicate the Fed’s stance.

Nonetheless, Fed officials have opined that the recuperating U.S. economy seems strong enough to withstand one or two rate hikes this year.

An Actual Greek Tragedy in the Cards?

Greek Prime Minister Alexis Tsipras snuffed out faint hopes of some bailout accommodation before Sunday's scheduled referendum, as he accused creditors of "blackmail" and appealed voters to reject the offered deal yesterday. While European partners continue to caution that a "NO" vote in the July 7th plebiscite would translate into Greece's exit from the Eurozone, Tsipras assured Greek citizens that it will turn out to be "a decisive step towards a better agreement that we aim to sign right after Sunday's result."

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