What happened in August?
A flurry of positive economic data from across the globe boosted markets in the final trading session of the month, bringing the S&P 500 Index back into positive territory after a volatile August. Aided by the strongest consumer spending growth in over a year, U.S. GDP growth was revised up to 3% in the second quarter, the highest quarterly growth of the economy in over two years.
U.S. Federal Reserve members were in agreement to shrink the central bank’s treasury and mortgage-backed securities holdings. However, slower than expected inflation growth is substantiating questions of whether the Fed will stick to raising interest rates in the final quarter. For the month, the S&P 500 Index finished +0.3%, and now sits +11.9% YTD.
Across the globe, the All Country World Index ex-U.S. (ACWI ex-U.S.) inched slightly higher in the month of August, keeping with its strong positive trend and bringing the YTD return to +18.9%. Expectations for the latter half of the year remain optimistic for global markets, particularly in the Eurozone where consumer sentiment hit a 10-year high in August.
Moving into September
Equity valuations are still near highs after a relatively flat month. Event-driven volatility is likely to continue as political tension between the U.S. and North Korea remains a concern along with events like Hurricane Harvey and its impact on energy supply. However, macroeconomic, sentiment and technical indicators increased throughout the month leading to increased equity exposure in our tactical portfolios. We enter September 91% invested in our tactical U.S. strategies and almost 100% in our international strategies.
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Valuation P/E multiples remained in line from July. Earnings season came to a close with price levels relatively unchanged for the month |
Sentiment Equity fund, SPY, hit a 2nd straight month of positive flows while the UM Consumer Survey experienced its largest one-month gain in 2017 to 97.6 from July’s 93.4 reading. |
Macroeconomic U.S. GDP growth was revised higher to 3.0% for the 2nd quarter and Eurozone inflation increased while the unemployment rate remained steady. |
Technical The S&P 500 Index bounced back to finish the month 1% above its 50-day moving average while 5% above the 200-day. |