U.S. Stocks Investment Management | Monthly Economic Update July 2016


Monthly Summary

It is said the stock market climbs a wall of worry. If so, the U.K.’s June referendum to exit the European Union provided perfect hand and toe holds to boost global markets higher. U.S. stocks hit new all-time highs in July, and international stocks posted even greater gains for the month. Moreover, in anticipation of additional monetary stimulus from global central banks, interest rates continued their steady decline. Over $11 trillion of international sovereign debt now carries negative interest rates, and the yields on U.S. government 10-year and 30-year debt plumbed historical lows.

Interestingly, despite telegraphing the intent to ratchet up monetary stimulus, major central banks actually did very little (in the case of Japan), or nothing, during July. Even the Bank of England deferred action pending economic data. That particular delay should be short-lived, however, and investment markets have dialed in a 100% chance of the BOE easing this Thursday.

As the month drew to a close, the initial estimate of second quarter U.S. GDP growth, 1.2% annualized, proved surprisingly tepid against expectations of 2.6%. Government and investment spending were weak, housing, heretofore a bastion of strength, declined for the first time since early 2014, and inventory growth not only slowed, it contracted. For now, investors have taken a “bad is good” stance. After all, bad news suggests a delay in U.S. Fed rate hikes and lower interest rates for longer.

Economic Data

Econ Data - 8816

Quarterly 8816Market Returns

Morningstar - 8816

Disclaimers

This commentary was written by Robert W. Lamberti, CFA, VP and Co-CIO of Summit Equities, Inc. and Summit Financial Resources, Inc. Source of performance: Morningstar®. Indices are unmanaged and cannot be invested into directly. The investment and market data in this newsletter is not an offer to sell or purchase any security or commodity. Past performance does not guarantee future results. The Barclays Capital U.S. Aggregate Bond Index is a market capitalization-weighted index comprising Treasury securities, Government agency, mortgage backed, corporate, and some foreign bonds traded in the U.S. The Barclays Capital Municipal Bond Index covers the U.S. dollar-denominated long-term tax exempt bond market. The Barclays Capital Global Aggregate ex. U.S. Bond Index measures the performance of global investment grade fixed-rate debt markets excluding USD-dominated securities. The Bloomberg Commodity Index measures the performance of the commodity sector representing an unleveraged, long-only investment in commodity futures. The Dow Jones U.S. Real Estate Index measures the performance of the real estate sector of the U.S. equity market, including real estate holding and development companies and Real Estate Investment Trusts. The Wilshire 5000 Total Market Index measures the performance of all U.S. headquartered equities with readily available price data. It is market capitalization-weighted and is designed to track the overall performance of the U.S. stock markets. The S&P 500 Index is a market capitalization-weighted Index of 500 widely held stocks often used as a proxy for the stock market. The Russell 2000 Index measures the performance of the small cap segment of the U.S. equity universe. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure the performance of developed markets, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure global emerging markets performance. Information throughout this Newsletter or any other statement(s) regarding markets or other financial information, are obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the reader. To unsubscribe from this investment newsletter please reply to this email with “unsubscribe” in the subject. Opinions expressed are subject to change without notice and are not intended as investment advice or a guarantee of future performance.  Consult your financial professional before making any investment decision. Securities and Investment Advisory Services offered through Summit Equities, Inc. Member FINRA/SIPC, and Financial Planning Services offered through Summit Equities, Inc.’s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600, Fax: 973-285-3666.

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