August 2016 Advisory Commentary

Post Series: Advisory Commentary

The S&P 500 closed down 0.1% last week, ending the four week win streak. It was still a great month for equities though, as the S&P 500 gained 3.69% for the best July since 2013, which gained 4.9%, and the best overall month since March added 6.6%. The monthly win streak remained intact though, as the S&P 500 is now up five months in a row. It hasn’t made it to six straight since early 2013. Tech, materials, and consumer discretionary led, while consumer staples, utilities, and energy all finished in the red and lagged.

The S&P 500 now is up for five consecutive months for the first time in two years. The last time it was up for six straight months was in early 2013. The logical question is: What happens next? Surprisingly, the returns after a five-month win streak are actually stronger than the average returns. Incredibly, since 1950 there have been 23 other five-month win streaks. A year later, the S&P 500 has been higher every single time with an average return of 12.9%.

The markets will now begin to fully digest the coming economic and fiscal proposals of the U.S. presidential candidates. This election cycle will undoubtedly cause the world markets some concern, but how much more volatility will be added is anyone’s guess. The polls will start to give us some indication, but as we’ve seen in the U.K., the inaccuracy of polls can sometimes cause more surprises than would be expected.

The onset of negative interest rates across large swaths of the world’s bond markets is beginning to reveal more of the unintended consequences of the actions taken by central banks over the past 7 years. This is a large area of concern for us and will likely cause even more unique market situations to develop as we move forward.

Brian Weckman, RFC
Chief Investment Officer
Actis Wealth Management L.C.

 

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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