August 2019 Volatility

What happened in August? 

August was a rough month, as the volatility continues.

     August was head spinning, marked by many measures to be the most volatile month in 2019.  Even with a strong finish in the last week of the month, the market finished down 2%.

     The top performing sectors in the S&P were technology +29%, Real Estate +28%, and consumer discretionary +21%.  (Non-essential goods) The bottom sectors were energy, health care and materials.  The S&P year to date is +18.3% amidst the August volatility.

     Although the sparing between Washington and Beijing continues to dominate the headlines and influence short-term moves in the market.  Investors grappled with as lack of clarity on the trade issues, global growth and a Brexit showdown.  The fears about escalating U.S. and China Trade tensions sent the stock market index tumbling down 2.3% three occasions in August. 

     September is proving to be a different month!  Today stocks surged and Treasuries are tumbling after news of the trade tensions have eased.   We have experienced an up-market gain in five of the last six market sessions.  We are very cautious about the prospects of a trade deal coming to fruition, although some trade concessions would be very positive for the economy and the market.  This President likes to “win”, even though he does not have international support all countries will benefit from the U.S. leading these negotiations with China.

     Even though corporate earnings growth has slowed down, the economy remains strong and unemployment is at an historic low.   We realize that it is very tempting for people to want to adjust their portfolios to match the daily headlines, we find this activity to be very counterproductive to portfolios.  Schenley has been advising clients to stick to their long-term asset allocations.