Weekly Market Commentary August 28, 2017

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The Economic Policy Symposium in Jackson Hole, Wyoming was the focal point of the week, leading to a choppy and range-bound market. U.S. Federal Reserve Chair, Janet Yellen, left investors uncertain as to when the next rate hike would take place.

The S&P 500 was up 0.7% and the MSCI ACWI closed 0.9% higher. The Bloomberg BarCap U.S. Aggregate Bond Index ticked up 0.2%. On the economic front, both new home sales and existing home sales declined more than expected as supply continues to remain low.

Turning to the Eurozone, economic data was better than expected with manufacturing readings for France and Germany coming in above expectations. The U.K. economy grew, in line with the initial estimates, by 0.3% in the third quarter, consumer spending, exports and business investment were disappointing.

Key bullet points for the week

  • Rebounding economic surprise data and global PMI data support the idea of a continued global economic expansion
  • Earnings growth will be moderate in coming quarters as the dismal energy earnings a year ago are dropping out of the comparison
  • Investors are stretching their risk – In addition to upping their U.S. equity allocation, they are pushing the risk levels of their stock and bond portfolios

What are we reading?

Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links:

U.S. existing home sales unexpectedly fall in July

Existing home sales fell to their lowest level this year as an inventory shortage continues to squeeze the U.S. real estate market. At a seasonally adjusted annual rate of 5.4 million, sales were down 1.3% from June’s reading. While July’s pace was 2.1% higher year-over-year, it was the lowest since last August. What’s more, U.S. new-home sales also fell sharply in July, further establishing that low inventory is a headwind to activity in the housing market.

Debt-ceiling drama could cause serious volatility ahead

If Congress fails to reach an agreement around the debt ceiling, it may cause a surge in volatility in the coming weeks as markets abhor uncertainty. While the Speaker of the House, Paul Ryan, assured that legislators have plans to raise the federal debt ceiling, headline risk will remain until an actual extension is signed.

Bitcoin price stays above $4,000 – will it continue to rise or will the ‘bubble’ burst?  

The highly speculative virtual currency, Bitcoin, jumped to $4,276 after hitting a record high of $4,500 last week and retreating. Having dipped as low as $3,674, the currency has rebounded in recent days to circle all-time highs from earlier this month.

Fun Story of the Week

Pound Coin Gag Scoops Best Joke at Edinburgh Festival

The Edinburgh Fringe Festival votes for the fifteen funniest jokes shared at the festival. The winner and other key vote getters are included below. We apologize in advance to our loyal readers for sharing comedy from Scotland.


“I’m not a fan of the new pound coin, but then again, I hate all change” – Ken Cheng

“I’ve given up asking rhetorical questions. What’s the point?” – Alexei Sayle

“I’m looking for the girl next door type. I’m just gonna keep moving house till I find her” – Lew Fitz

“I like to imagine the guy who invented the umbrella was going to call it the ‘brella’. But he hesitated” – Andy Field

“Whenever someone says, ‘I don’t believe in coincidences.’ I say, ‘Oh my God, me neither!”‘ – Alasdair Beckett-King

“A friend tricked me into going to Wimbledon by telling me it was a men’s singles event” – Angela Barnes




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