August NewsletterSubmitted by Rademacher Financial Inc. on August 17th, 2017
Markets Continue Climb in July
|6/30/2017 Close||7/31/17 Close||Change||Gain/Loss|
|Russell 1000 Growth||1,192.07||1,222.93||+30.86||+2.59%|
|Russell 1000 Value||1,139.82||1,153.15||+13.33||+1.17%|
|Barclay's Capital Bond Composite||279.16||279.64||+0.48||+0.17%|
Here’s a look at what is happening in the economy and capital markets, as well as key factors we are watching:
- Real GDP rose at a 2.6% annual rate for the second quarter, averaging a 1.9% pace over the first half of the year.
- Consumer spending growth rebounded from a soft first quarter, but monthly figures suggest some loss of momentum heading into the second half of the year.
- Private-sector job growth in 2017 has remained strong, roughly the same as in 2016 – although tighter labor market conditions are expected to be a restraint in the months ahead.
- Major domestic stock indexes had once again reached record highs before some less-than-impressive tech earnings reports toward the very end of the month prompted investors to take profits.
- Amazon briefly dragged tech stocks lower as shares fell 3.3% at the end of the month, following weaker-than-expected quarterly numbers.
- Other major tech companies, including Apple, also declined during the last few trading days of July.
- The S&P 500 is no longer being driven higher by a handful of stocks and is in line with historical upward moves of the index. See the attached chart below from J.P. Morgan and Bloomberg
- The dollar’s recent swoon against the Euro and British Pound over recent weeks had an impact on European markets as shares in exporting companies sold down.
- The tone surrounding European investment opportunities continued to improve as the International Monetary Fund upped its expectations for eurozone growth.
- Emerging markets in aggregate continued to rally, aided by the lower dollar.
- The Federal Open Market Committee left the target range for the federal funds rate unchanged at its mid-July meeting and repeated that it “expects that economic conditions will evolve in a manner that will warrant gradual increases” in the quarters ahead. The central bankers also indicated that they expect to start unwinding their balance sheet “relatively soon” (most likely in October).
- Treasury demand continued to be strong during the month.
- Continued demand for U.S. securities from foreign investors assists in keeping interest rates down.
- The equity markets continue their upward march. The positive returns have broadened into a larger group of stocks. However, mid cap and small cap stocks are still lagging.
- International equities have benefited from a weaker U.S. dollar
- Investors may be able to potentially take advantage of short-term volatility to buy quality stocks at a possible discount.
On a Personal Note…
July has passed quickly, Garrett and I have been going to the gym together two or three times per week. It’s a little weird working out with someone whom is basically your doppelganger, only 31 years younger! After the gym, we usually go for a bike ride on the Levee. I use the term “we” loosely. I should say Garrett takes off and Dad lumbers behind. Garrett has been enjoying riding this summer. He participated in the Sunflower Bike Shop Sunday morning ride this past weekend. It was a 45 mile ride out to Lone Star and back. His first-time riding with “serious” riders. Let’s just say he did it and he wasn’t last! I think this means I will be spending a lot more time on the bike, as well.
Katelyn is close to wrapping up her summer internship in Washington DC. I know she has enjoyed her experience there and looks forward to returning in the future. Rachel and I have enjoyed hearing about her adventures as well as how much she has become a neat freak in the upkeep of her apartment. She did make it home for the 4th of July/ her birthday. We had a great time including visiting the local bars at midnight on her birthday eve to celebrate her 21st.
Rachel has been able to increase her time in her glass studio this month. She is working on a new design as well as some ongoing designs for a possible show later this year. She always enjoys getting to work on her “artistic” side. Rachel, of course has shown both Garrett and I up at home by winning her age group last week in the Summer 5k Series sponsored by Ad Astra Running Store.
Rachel and I took some time off in July to work on a few house projects, replacing light fixtures with LED fixtures and refinishing the deck. As part of our week away from the office we traveled to Bentonville, Arkansas. Yes, the home of Walmart. We were there to see the Chihuly Glass Art Exhibit at Crystal Bridges Art Museum. Check out our pictures on Facebook. The permanent collection at Crystal Bridges is free for viewing and the special exhibits are usually very reasonably priced. I had heard from a friend that Bentonville has fantastic biking trails. We took our bikes and even Rachel enjoyed biking next to the river. Their trail system was very impressive, both paved and single track.
I hope everyone gets out to enjoy the cooler weather if you have it. I know friends and clients in Seattle are battling 100-degree record days right now!
I’ll catch you next time,
Phillip A. Rademacher, CFP®