The U.S. markets were up again in August with the S&P rising 0.31%, while small stocks continued their relative underperformance year to date down -1.27%.
The Gulf region continues to recover from the effects of Hurricane Harvey. It will be several weeks before the economic impact of that devastating storm can be measured.
Tensions surrounding North Korea have had more impact on the markets of late. Recent escalation of the conflict has driven investors to safe haven assets.
Year to date the equity market is continuing the trend of the previous few years of low volatility and positive returns. We have now experienced 18 consecutive months without a normal market correction, which is highly unusual.
International markets outperformed the U.S. markets with the MSCI All Cap World Index ex-U.S. up 0.52% in August. Emerging markets were up 2.23%, extending their strong performance.
The broad weighted dollar index is having its worst year on record. The weak dollar has helped boost international equity returns for U.S. investors.
With improving synchronized global growth, earnings should support rising equity values in the U.S. and abroad.
We increased our international equity exposure based on improving growth prospects and attractive valuations. Foreign equity returns have decoupled from the U.S. markets, providing portfolios added diversification and return.
Emerging market equities have climbed this year, largely driven by an increase in earnings and a weaker dollar. Valuations have also picked up, although they still do not look especially high.
The Federal Open Market Committee did not meet in August, so the target federal funds rate range remained at 1.00%-1.25%. If upward price inflation continues to stagger, the committee may be hard-pressed to raise interest rates when it next meets in mid-September.
- This information has been compiled using data and other statements of fact derived from sources which we believe to be accurate and reliable. However, such data and other statements of fact have not been verified by us, and we do not make any representations as to their accuracy or completeness. Any opinion expressed herein reflects our judgment at this date and is subject to change.