August Economic Outlook - Sumner Wealth Management

newsletter-header
 

 

Economic Outlook

August 2015

 
 

Dear Visitor,

July Market Recap

July was a decent month for the global financial markets, but definitely not for all markets.

The overall U.S. stock market (Russell 3000) gained nearly 2% last month, with large cap stocks (S&P 500) leading the way at 2%. However, U.S. small caps (Russell 2000) lost over 1%. All economic equity sectors were up, with the exception of natural resource stocks, which were down about 5% on average.

International stocks (MSCI ACWI ex-U.S.) did post small losses, but there was quite a difference between developed economies (as expressed by the MSCI EAFE Index), which were up 2%, and emerging market stocks (MSCI Emerging Markets Index), which lost about 7% led by losses in China.

The bond market (Barclays Capital Aggregate Index) gained just under 1% last month, with the U.S.Treasury 10- year bond yield ending the month at 2.18%.

 

Treasury Bonds Rally as Stocks and Commodities Sink

Equity markets struggled this month, weighed down by continued weakness in the energy markets. The price of a barrel of oil fell another $3 which is now below $44 per barrel. Broad commodities dropped another 3 percent, and have plunged nearly 17 percent year-to-date. The decline in commodity markets has been attributed to concerns over sluggish global demand and continued excess supply from oil producers. For example, according to Baker Hughes, despite lower prices the U.S. oil rig count has risen five of the last six weeks. While stock markets fell, the U.S. 10 Year Treasury Note rallied, with its yield slowly dropping to end the week at 2.17 percent.

 

Index Returns (%) 

Source:  Bloomberg

Index

YTD

1 Year

Dow Jones 30

-2.52

4.95

S&P 500

0.91

7.56

Russell 2000

0.19

6.68

MSCI EAFE

5.09

-0.27

S&P GS Commodities

-16.97

-44.09

U.S. Trade-Weighted $

8.17

19.97

 

Market Performance

1Russell 3000 2S&P 500 Index 3Russell 2000 Index 4MSCI ACWI ex-U.S. Index 5MSCI EAFE Index 6iShares
MSCI Emerging Markets Index 7Barclays Capital U.S. Aggregate Bond Index 8Barclays Capital 1-3 Month U.S.
Treasury Bill Index

Stock Market

JULY

QTD

YTD ‘15

3 YR

Total U.S. Market1

+1.67%

+1.67%

+3.65%

+18.00%

Domestic Large Cap Equity2

+2.10%

+2.10%

+3.35%

+17.58%

Domestic Small Cap Equity3

-1.16%

-1.16%

+3.54%

+17.90%

International Equity4

-0.28%

-0.28%

+3.75%

+8.83%

Developed International Equity5

+2.08%

+2.08%

+7.72%

+12.32%

Emerging Market Equity6

-6.93%

-6.93%

-4.19%

+0.61%

Fixed Income

JULY

QTD

YTD ‘15

3 YR

U.S. Bonds7

+0.70%

+0.70%

+0.59

+1.60%

Cash Equivalent8

0.00%

0.00%

+0.00%

+0.04%

 

Resilient Economic Data Supports Fed Rate Hike in September

The odds of the U.S. Federal Reserve ("the Fed") raising short-term rates at their September 16-17 meeting probably inched higher concerns. While softer than expected, the Institute for Supply Management (ISM) report on manufacturing remained solidly in expansion territory, while the ISM Services report was very strong. The Non-Farm Payrolls report for July came in-line with expectations. Headline job growth  was 215,000 (versus expectations of 225,000). The unemployment rate remained at 5.3 percent, "aided" by a participation rate that is at its lowest level since October 1977. Average hourly earnings growth was also lackluster, rising just 2.1 percent y/y. However, given Atlanta Federal Reserve President Dennis Lockhart's comments, that it would take a "serious deterioration in the data" to not hike short-term rates in September, it appears that evidence of trend-like economic growth will be sufficient for the Fed to move at their next meeting. The potentially most "market-moving" data before that meeting will be the Non-Farm Payrolls report for August (released September 4) and the Fed's annual conference at Jackson Hole, Wyoming on August 27-29.

 

While Down for the Week, Stocks Remain Range Bound

Equities certainly had a trying month, digesting the effect of lower oil prices on energy stocks, and the effect of a higher U.S. dollar on corporate revenues. According to Zacks Investment Research, while 49.6 percent of those S&P 500 companies that have reported Q2 earnings have surpassed revenue expectations, just 34.3 percent of Russell 2000 companies that have reported Q2 earnings have surpassed revenue expectations

 

Welcome New Clients to Sumner Wealth Management            

Marcus L.

BSC 401k plan

Doug C.

 

Bobbi M.

 
 

To my clients, friends, and colleagues. Thank you for your continued support!  I would like to   hear your thoughts and feel free to forward this on to other individuals who could benefit from this information.

 

Sumner Wealth Management       

Mark Sumner                                         
Financial Advisor  

 

Our firm assist individuals, families, and businesses in proactively preparing themselves for a broad range of financial decisions and life events by utilizing a team of specialized individuals to help our clients gain income protection, financial stability, and overall peace of mind for themselves and their loved ones.  We are an Integrated,  Wealth Manager Specialists.

 

newsletter-graphics

 

 

Services Offered:

  • Business & Personal Financial Planning
  • Business Continuation Strategies
  • Retirement Plan Consulting & Design (401k)
  • Investment Programs
  • Tax & Estate Planning Strategies
  • Life, Health, Disability, and Long-Term Care Insurance
  • Medicare Supplement Plans

 

 

 

 

Sumner Wealth Management Office

 

Business Address

517 Alcove Road, Suite 202 Mooresville, NC  28117

 

Contact Information

(704) 660.5510 x401

msumner@ssnrep.com

 

 

 

 

website-graphic

 

 

 

 

Securities offered through Securities Service Network, Inc. Member:  FINRA/SPIC

If a recommendation is included in th above email, please contact me for additional investment information supporting the recommendation.

Fee based advisory services offered through SSN Advisory, Inc. a registered investment advisor  


Sumner Wealth Management,Inc. | 517 Alcove Road | Suite 202 | Mooresville | NC | 28117

(704) 660.5510 x401 | www.sumnerwealthmanagement.com | msumner@ssnrep.com

If you don't wish to receive emails from us, please .
Th

 

 

Markets Rarely Move in Straight Lines  

 

The recent action in global fixed income and currency markets (e.g. the U.S. trade-weighted dollar has dropped four percent over the last three weeks) is a good reminder that markets rarely move in straight lines, and that it is always prudent to check one's long-term assumptions if tempted to board what may feel like the investment equivalent of a one way train. The German Bund's recent rise in yield or U.S. Dollar's recent pullback are prime examples of this.