Global equities closed the week in positive territory with the S&P 500 up 1.0%, the MSCI EAFE up 0.3%, and the MSCI Emerging Market index up 0.6%. Many of the U.S. equity indices are posting fresh all-time highs including the S&P 500, the Nasdaq 100, and the Russell 2000. On the surface, a new all-time high sounds great. However, from a year-to-date perspective, we are only now reclaiming the price levels of the previous all-time-highs which occurred back in January. Nonetheless, a 9.9% and 14.3% year-to-date for the S&P 500 and the Russell 2000 compared to -2.3% and -7.2% for the MSCI EAFE and the MSCI Emerging Markets indices year-to-date is excellent.
Economic data in the U.S. continues to come in looking very strong. The economy expanded at a 4.2% rate in the second quarter. This figure was revised upward from the 4.1% previous estimate. The consensus expectation is that growth will slow a bit into the end of the year but will still come in around 3.0% for the year which would be tremendous. The latest consumer-related economic surveys have been very positive. The Conference Board’s Consumer Confidence Index reached its highest level in eighteen years, and the Michigan Consumer Sentiment Index for August was revised higher than the market expected. Consumer confidence is important as it is because the consumer represents about 70% of U.S. GDP. The combination of increased corporate profitability and increased consumer confidence leads to an optimistic view on the U.S. economy.
On the trade front, the renegotiation of NAFTA has been in focus as the U.S., Mexico, and Canada try to get a new deal in place before year-end. It has been reported that the U.S. and Mexico have come to an agreement, but some details still need to be worked out between the U.S. and Canada. The European Union has said they may drop the automobile tariffs targeted at the U.S. if we do the same. President Trump has not yet directly responded to this but in the past has not been receptive to the idea. Moreover, regarding China, President Trump threatened additional tariffs on another $200 billion of Chinese goods which could be imposed as early as this week.
Author: Jim Rambo, CFA | Research Team | Allegheny Financial Group | September 2018
The information included herein was obtained from sources which we believe reliable. This report is being provided for informational purposes only. It does not represent any specific investment and is not intended to be an offer of sale of any kind. Past performance is not a guarantee of future results.
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