The return of volatility

There is no indication that this volatility is going to end anytime soon given all the variables in play.We finally got into earnings season and what could possibly calm the markets and what would people want to hear. They want to hear the facts,they want to understand the fundamentals. We are starting to hear from banks and now we are going to start to hear from many more companies and obviously Technology is going to start reporting as well. I believe that the VIX is telling you something, having pulled back significantly. The earnings reports are also starting to calm people and volatility down.We were thinking that earnings season will calm things down if the numbers live up to the expectations and where the bar had been. But, maybe volatility sticks around perhaps longer into the year than people may suspect. What has happened SOME OF THE SAFETY NET has been taken away from the Federal reserve backstopping the market. And anytime you don't have a safety net as you take risk there is a greater risk of something going wrong. So the Probability of that have increased and the vix is telling you that those probabilities have increased. The VIX is an index that measures the amount of volatilityin the market daily.So your having this Tug of war between really good earnings and Economic growth and headline risk that surrounds Inflation,Trade,Politics,and what ends up happening some of those things will fade to the background. But, I believe the one real risk that exists is inflation risk.Are we to quick to say that this Earnings season has been a raging success yet and we do not have to worry about some of the noise and ancillary issues that have been so front and center for the stock market. I think we are early , because we are in the heart of earnings season as of yet. So you have hadsome good earnings reports up front , but you have also had some reports that where weak such as IBM .So it's encouraging to me Worth noting Expectations remain very high and I don't think you look to IBMas type of indication what the market is doing because IBM is in it's own world?Is there an opportunity in energy? The value play is coming back into favor and energy is the sectorto realize that value. Just at the gas prices at the pump the last few months. From an investment price to earnings on value VS growth we are at levels we have not seen since 2006 and I do think we are going to see a rotation to value with a few select Tech stocks.Lastly, I think we are pivoting from an environment where it was simply risk-on and what has happened is volatility has brought back securities selection. If you think about how most value managers look at picking stocks. What they do indepth fundamental analysis makes sense.John C. Verducci 111