US Economy: GDP surges but housing cools.
2nd quarter GDP growth was revised upward to 4.2%, as business investment and inventories increased more than initially estimated. High real estate prices and low inventory have hurt existing home sales (-0.7%), which fell in August for the 4th straight month.
US Stocks: Growth and small-caps all the rage.
Technology shares (+15.9%) outpaced other sectors, as the market focus stayed on growth over value. Small-cap stocks also surged, benefiting from the 2017 tax cuts and also less exposure to foreign markets.
Foreign Stocks: Concern over trade, currencies.
Non-US stocks lagged US equity markets, posting losses. The continued strength of the US dollar and escalating trade tensions could not offset optimism about a new US/Mexico trade deal at month-end.
Fixed Income: US debt as safe haven.
Recent global uncertainty has slowed the upward march of US interest rates. The yield on 10-year US Treasuries fell 0.1% to finish August below 2.9%, partly due to foreign investors favoring the safety of US government debt.
Real Assets: Commodities in a tough spot.
Oil (+4.3%) was a bright spot within the otherwise struggling commodities asset class. Soybeans (-8.2%) and other commodities most likely to be hurt by import tariffs and a stronger US dollar weighed down the asset class.
Alternatives: Uneven results.
Generally, hedge fund performance was positive for August, particularly for funds that engage in short-selling as well as buying. However, an unexpected change in the level of price correlation among asset classes surprised many managers leading to flat or negative results for the month.
Equities Total Return
|U.S. Large Cap||3.3%||9.9%||19.7%|
|U.S. Small Cap||4.3%||14.3%||25.4%|
Fixed Income Total Return
|U.S. Agg. Bond||0.6%||(1.0%)||(1.0%)|
|U.S. High Yield||0.7%||1.9%||3.3%|
|Munis Broad Mkt||0.2%||0.1%||0.5%|
Non-Traditional Assets Total Return
|Overall HF Market||0.5%||(0.6%)||1.5%|
|Gold Spot $/OZ||$1201||$1318||$1321|
|U.S. Dollar Index||90.6||85.7||88.2|