The Back and Forth Market Continues…
August is now in the books, and good riddance. After hitting the yearly high in July, August was a back and forth market based on the rhetoric of our trade war. Negative information punished the markets, and words suggesting trade war improvement moved us higher. The negative, however, certainly outweighed the positive in August.
For the week, US equities moved higher with the S&P 500 up 2.83%, the Dow Jones Industrial Average increasing 3.14% and the Russell 2000 Small Cap Index increasing by 2.46%. Over the pond, equities didn’t fare as well, however the developed market index, the MSCI EAFE rose .91% and the Emerging Market Stock Index moved up 1.16%. For the month of August, the S&P 500 lost (1.58%), the Dow (1.32%) and the Russell 2000 (4.94%).
BONDS on the other hand continue to move up in price, as buyers are rushing in pushing down the 10 Year US Treasury to 1.50%, as of the close last Friday. The US 2 to 10 year slope remains slightly inverted, which last week, did not impact the equity markets as weeks prior. As of this writing, the US equity futures are in the red as the latest round of tariffs went into place on September 1st. Many had thought there would be reprieve…. which could be part of the reason for last week’s market surge!
6 Months from now????
One thing is certain, 6 months from now, I’ll be looking forward to spring and summertime as I am NOT a cold weather person. This past Saturday, I was sitting on the beach in Beach Haven looking out at the ocean and I asked myself this question: “Where will the stock, bond market and our economy be in 6 months?!” Quite frankly, I had a lot of trouble concluding anything definitive….
I recall being taught early in my career that the stock market is a forward looking mechanism regarding the economy. The current market is supposed to reflect the status of the economy 6 months forward. Wow! Taking a look at our markets, stocks are near all-time highs even with the August pull-back. This used to suggest our economy will be booming come next March. The fact of the matter is that much of our economic data has slowed considerably… in great part to the overall impact of the tariff situation. The economic and corporate earnings comparisons have become more challenging, after we’ve already come so far over the last several years.
The Bond market on the other hand is saying (to some) that the global economy is tanking, and the recent purchases are a pure flight to safety. Others suggest because US rates are still higher than much of the developed world, money has nowhere else to go. So come next March, we will have made it through a holiday shopping season, which many are apprehensive because of the tariff impact. We should have a little more clarity as to who may be the Democratic Presidential candidate and hopefully the tariff situation will be in the rear view mirror!!!!!
So… where to do you believe the stock and bond markets will be next March? As you know, I do not make predictions, which makes it so, so critical to have your investment assets properly coordinated, with your current and projected income needs for retirement.
Question of the Week…
Which of the following is not a Medicare Enrollment period that lets you enroll in Medicare for the very first time?
- The Initial Enrollment Period
- The Special Enrollment Period
- The Open Enrollment Period
- The General Enrollment Period
Answer to last week’s question…!
Which of the following services is NOT typically covered by Medicare?
- Dental Services
- Eye Exams and eyeglasses
- Hearing aids
- Long Term Care services and supports
- All of the above
The answer is #5 – all of the above!