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Summer Sizzled!

by Doug & John Coppola, Sep 06, 2018

During the month of August, U.S stocks continued to rise, climbing the classic “wall of worry." 
We’ve experienced rising profits and record U.S. share prices despite trade concerns, tariff wars, submerging emerging markets, rising short rates, a strong dollar and November election uncertainty.   
Investors are putting America first as other world markets swoon;                        
Germany -8.4%, France -0.6% and UK -6.3%. Big Cap China -8.2%, Japan -2.9%, India -1.1%, 
Brazil -19.8%, Russia -5.6%, South Africa -21.6%, Australia -2.9% and Canada -2.8%. 
According to IBD, these countries were all down year to date through month's end. 

Interestingly, Mexico is +2.1% along with the SPX +8.5%. 
Leaves one with the impression that the trade war effects are one sided so far.

Diversification became "de worse ification" for many portfolios as the AGG, 
iShares U.S. Aggregate Bond Index, was -0.99% year to date along with most 
foreign market exposure. 

Second quarter S&P 500 earnings were up 25% the best growth since Q3 2010. 
The 2nd Q GDP was revised up to +4.3%, the best number in years.
Nearly double the 2.2% average since the Great Recession ended in 2009. 
New fiscal policies and less regulation have boosted production and lowered unemployment. 
Inflation remains low. 

Even as the Fed is expected to raise rates in September, December and possibly more in 2019.
September is typically a weak market month but old patterns don't seem to apply. 
Increasing levels of foreign flows into U.S. assets continue to provide a strong backdrop for rising
equity prices. Profits will be up over 20% in 2018 and we expect another double-digit gain in 2019.
Perhaps the election will cool down the pace of this record climb?
A strong Spring and Summer is a rare combination which often bodes well for positive for 
year-end price levels. 

If you would like a portfolio review to discuss a financial plan please let us know.


 
Disclaimer: These stock market observations are confidential and proprietary. They are for informational purposes only and are not intended to be used, and may not be used, as investment, legal, accounting, tax, or other advice. No express or implied representation or warranty is being made with respect to their accuracy or completeness. No obligation exists to inform the recipient when the information herein is no longer current or accurate. These observations do not constitute an offer to sell or a solicitation of an offer to buy any securities or interests in any investment vehicles managed by CFA or an associated person or entity, or to provide investment advisory services.