Good Times Prevail: Optimism in the Domestic and Global Economic Outlooks
"Market participants returned from summer vacations in a good mood. Indeed, optimism in the domestic and global economic outlooks has ratcheted up a notch, but has not reached a euphoric level that often presages a building speculative bubble. Political drama in our nation’s capital and a spate of global and domestic natural disasters have not dampened optimism.
Volatility in financial markets has almost totally disappeared. U.S. stock prices, while at all-time highs, have edged up only about 1.5 percent over the past two months. Bond yields remain lower currently than at the start of the year. Economic activity is grinding higher ever so slowly. Risks, which always lurk beneath the surface and which have a nasty habit of surprising markets, seem pretty bland at the moment."