August 15, 2016

Global markets rose last week bolstered by a rebound in the price of oil and the ongoing sense that the Fed remains on hold.  One for the record books – for the first time since 1999, all three major stock indices in the United States closed at record highs on Thursday.  Boy, it certainly doesn’t feel like market averages are at all-time highs, but this just reinforces the theme of our last quarterly newsletter – Speculation/Crisis/Recovery.

For the week, the DJIA finished higher by 0.33% while the broader-based S&P500 eked out a gain 0.12%.  International markets were strong as the EAFE Index jumped 2.85% for the week while emerging markets posted an increase of 2.81%.  Fixed income, represented by the Barclays Aggregate, finished the week higher by 0.42%.  As a result, the 10 YR US Treasury closed at a yield of 1.51% (down 7 bps from the previous week’s closing yield of 1.58%).  Gold fell by 0.60% to close at $1,335/oz.

On Thursday, the Department of Labor reported that initial jobless claims for the week ending August 6th were 266k … another confirmation of a robust labor market.  Offsetting the labor news was yet another tempering of global oil demand by the International Energy Agency.  More sour news came on Friday as retail sales were flat for the month of July … lower than the 0.5% expected increase.  These data points along with recent comments from Fed officials reinforce the “lower for longer” mantra for both interest rates and oil prices (mostly good news for consumers).

We expect volatility to remain high as investors digest conflicting economic and political news in the week ahead.  As always, we plan to look through the day-to-day news and focus on longer-term objectives.

Congratulations to Team USA!  We are proud of our athletes competing in the Olympics in Brazil … what a great testament to the American spirit.

Enjoy the summer …

“If you don’t have confidence, you’ll always find a way not to win.”  –  Carl Lewis