It’s been a busy and pivotal last three weeks. Earnings have generally been better than expected, but manufacturing data at home and abroad continue to slide1. GDP, while slower than last year, came in at 2.1% which was a bit better than expected1. The well-telegraphed Fed cut of 25 bps came on 7/31, but Chairman Powell was a bit unclear with guidance in his press conference which led to a selloff in risk assets and rates sinking. THEN, a tweet on 8/1 of more tariffs on $300B of goods from China has put further pressure on risk assets and rates1. Oil prices sank and the yield curve inverted again to around -20 bps 10 yr to 3mo1.
Bottom line: we are in a very fluid situation, one that requires flexibility and discipline. As a reminder, we are modestly underweight equities tactically and significantly overweight US large-cap dividend growers and US large-cap growth stocks within equities. High-quality intermediate within fixed-income allocations.
We continue to focus on the inverted yield curve, strengthening USD, weak manufacturing, the ideological stalemate with China and the thus far resilient US consumer (employment, sentiment, and income data). We are not bearish or expect a US recession in the next few months, but we strongly think this is an environment for caution. We’d recommend rebalancing strategies in addition to discussing risk tolerances and time horizons with your clients at a minimum.
As always, thank you for your confidence in our team.
Fundamentum Investment Committee
Chad Roope, CFA® Portfolio Manager
Paul Danes, CFA® - Investment Committee
Trevor Forbes - Investment Committee
Matt Dunn, CFA® - Chief Compliance Officer
Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.