Market Musings 8/10/2023
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
The S&P 500 rose +3% in July as investors remained giddy the market was heading for the ideal “Goldilocks” soft landing…
Fresh off a strong 1H performance, July kicked off right where June ended－bullish for the end of #RisingYields, an #AI wave and balanced macro data setting up for the perfectly balanced “Goldilocks” #Recession2023 soft landing. The S&P 500 rose +3% in July ending at its 2023 YTD peak.
Just as in previous months, macro data could do no wrong. The June CPI declined faster than expected. Mixed #LaborMarkets data was positioned as “balanced”. US GDP continues to grow. Even consumer sentiment and spending was on the uptick. Investors remained giddy the market was heading for the ideal “Goldilocks” #Recession2023 soft landing.
Earnings started mid-month and was the next test. Initial bank earnings were strong and eased residual worries about the #BankingCrisis earlier in the year. Overall, stocks struggled despite many beat and raises particularly for high-growth companies. However, Communications #BigTech blew out earnings and ultimately led markets higher.
In the last week, the Fed hiked rates 25 bps after holding steady the prior meeting. While Powell remained steadfast there no decision on the end of rate hikes yet, market sentiment rallied as if #RisingYields were over. However, Powell did feed the “Goldilocks” narrative noting the Fed was no longer forecasting a recession.
July was another strong month for Ursa’s portfolios in aggregate. Our portfolios strongly benefited from our Financial sector tilt as well as Communications sector M&A. We also benefited from market rotation buoying our #Flight2Safety names.
We’d be cautious of markets here. August has already given up almost all of July’s gains through the first 10 days. While we think the 2022 bear market has bottomed, we still think most of the near-term upside has already been priced-in with the S&P 500 still up +16% YTD. We believe the market is finally realizing #RisingYields may not be over and likely not reversing anytime soon. While we see near-term volatility, we still recommend regular contributions to portfolios, but look for market pullbacks for more advantageous opportunities to add.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.