The S&P 500 continues to mostly recover quickly from setbacks, even in the face of new risks, but that tendency is unlikely to persist indefinitely.

All year, markets have remained surprisingly resilient in the face of troubling developments, both domestically and internationally. Most recently, we’ve seen volatility in oil prices, policy disagreements within the Federal Open Market Committee (FOMC), the rate-setting arm of the Federal Reserve, and liquidity problems in very short-term fixed income markets. These developments come on top of ongoing uncertainty created by U.S.-China trade tensions and other geopolitical risks.

The S&P 500 has quickly bounced back from each news-driven decline and is up 19% year-to-date, near record highs reached earlier this year. While some investors see this resilience as cause for bullishness, I remain cautious. Important questions loom. Below are three new areas of concern that may well lead to more volatility:

  • Oil market disruption: Attacks on Saudi Arabia’s oil fields led to concerns about supply risk and caused a large one-day spike in the price of oil, which then retreated, as investors were reassured that a long-term shock to oil prices was unlikely. Is it really that simple? I think Middle East tensions are intensifying and related oil market dynamics are complicated. Further oil market disruption is a possibility.

  • Lack of unity on Fed: The FOMC voted to cut rates again at its mid-September meeting, as expected. But there was an unusual lack of consensus. Three members dissented. This is one reason that volatility in interest rates has spiked. Since September 1st, the benchmark 10-year Treasury yield has rapidly climbed from 1.4% to 1.9%, and then retreated to 1.75%. Those are big swings for bonds.

  • Upheaval in money markets: The very short-end of the bond market has been even more turbulent recently. An overnight lending rate spiked and the Fed had to step in to restore liquidity to the so-called repo market. While this was a technical problem more than a problem in the banking industry, it does make me wonder why the Fed didn’t anticipate this event and what it will do if it can’t control short-term interest rates in the future.

While at the index level, U.S. markets may seem calm lately, a lot of turmoil lies just below the surface. The good news is that diversification is working: When Treasury prices fell, stocks rose, sheltering investors who own both asset classes.

Investors should strive to be highly diversified by asset class, geography and sector, favoring active management and high quality, income-producing securities that are more likely to hold up if complacency fades. The fact that the stock market is shrugging off the latest round of macro risks this late in the business cycle makes me cautious, not bullish.