“Off The Wall” Blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
Summer – Goodbye, I Hardly Knew Ya.
By David B. Armstrong, CFA | Sep 03, 2013 | Weekly Market Commentary
I took a two week break from blogging as I attended a great industry conference on the west coast and then had knee surgery to reconstruct a torn ACL in my knee. I was making such good progress on my golf game and then that happened. Summer is now over, my knee has more colors than a Jackson Pollock painting and the next thing you know we’ll be setting the clocks back and driving in the dark at 4:30pm.
August is usually a pretty slow month for the markets. Trading volume is light and a lot of people are on vacation. For the month, the Standard & Poor’s 500 Index (S&P 500) was down -3.1%. That’s rough, but not catastrophic given the fact that the S&P 500 is up +14.5% YTD through August and hit its all-time closing high on August 2nd. Looking at September, it is usually the weakest month of the year for the equities.
See below for more info on the market last week.
Economic Reports and Other News (Have you heard about Syria!?)
Unless you have been completely unplugged over the past week, there is a lot of talk about the U.S. bombing Syria because Syria bombed Syria. I won’t get into the politics of this but it has caused a little bit of volatility in the U.S. equity markets and with the price of oil. Two things about oil:
- Syrian output of oil is not the issue.
- It’s the recent reduction in output from Libya that has cause the rise in prices.
Three cheers for the revised Second-Quarter GDP! As you may know, the first report on any quarter of GDP is never the LAST reading on that quarter’s GDP. The initial report came with GDP at a measly 1.7% but was revised UP last week to 2.5%! Not bad. Here’s a graphic from the August 30, 2013 edition of the Wall Street Journal.
Economic reports will be numerous this shortened holiday week, 25 in all. The ISM Manufacturing Report released this morning showed U.S. manufacturers expanded in August at the fastest pace in more than two years. This closely followed index rose from 55.4% to 55.7% in July when most economists were predicting it to shrink down to 54.1%. Any number above 50% indicates that manufacturers are expanding. We will see ISM Non-Manufacturing (Services) on Thursday and several employment reports on Friday.
So while there is still some general lack of confidence in the economy (for example, jobs are still not great and the GDP is still anemic), it’s not all gloomy and there have been pockets of strength. Housing is well off the bottom, auto sales have been strong, and we can’t ignore the shale oil and gas revolution, which is creating wealth and spurring investment in infrastructure that’s needed to move this new U.S. oil production.
Over the next month we will probably see answers to the following questions: Who will replace Bernanke when his second term expires at year-end? How will the upcoming debate over raising the U.S. debt ceiling impact markets and politics? Will we see any evidence that the economy is gaining steam? Will troubles in emerging markets fade? How might Europe’s burgeoning recovery proceed?
Stay tuned and please call or email with questions.
Investment advice offered through Monument Advisory Group, LLC a Registered Investment Advisor (RIA). Securities offered through LPL Financial. Member FINRA/SIPC. Monument Advisory Group and Monument Wealth Management are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values. The 2, 10 and 30 year Treasury is simply the yield at the close of the day.
(1) West Texas Intermediate crude spot price is as of end of week.
(2) London Bullion Market Association; gold fixing pricing at 3 p.m. London time.
Stay up to date!
Subscribe to our “Off the Wall” Blog for articles and videos on all things wealth management, by all members of our Team. Unlike Facebook, we will never share your data with anyone.