Economic data included U.S. GDP seeing minimal revision, but still a slower pace than Q1, gains in personal income and spending, as well as durable goods. On the other hand, new home sales continued to come in weak, while several home price indexes showed minor gains, now below the pace of inflation. Consumer sentiment also remained negative, due to inflation concerns.

Equities were mixed, with gains in the U.S. and tech-related emerging markets, and flattish elsewhere. Bonds were also flattish as interest rates calmed. Commodities were mixed, with gains in grains, and declines in the prices of energy and precious metals.

U.S. stocks rose last week, at least in the large cap group, with little change in PCE inflation and mixed economic results, while small caps fell back. The week began with U.S.-Canada tariff negotiations collapsing, with the U.S. applying a 50% rate on $20 bil. of imported goods, with Canada retaliating dollar for dollar at varied rates, and an expected economic and inflation headwind to Canada should the policies persist through year-end and beyond. By sector, gains were led by technology (mostly Microsoft, but also as Nvidia’s earnings continued to grow at an extraordinarily strong rate), communications (primarily Meta, following the conclusion of their trial around the impact of social media on children—with an agreement to pay over $16 bil.), and financials. Laggards included negative returns for energy, health care, and industrials. Real estate also fell back.

The Federal Reserve was preoccupied by the annual Jackson Hole Symposium, where markets awaited Chair Warsh’s Friday keynote comments. He advocated for a “quieter Fed” (with limited forward guidance), and that “the Fed’s predominant focus right now should be on prices,” as inflation was “concerning,” and “we have work to do,” were taken more negatively by the stock market as odds of a Sept. rate hike went up (from about 35% to just under 60% by Friday). At the same time, he noted that he’s “impressed by the overall performance of the economy, which appears to have strengthened.”

Foreign stocks were mixed, with weakness in developed markets in Europe, in keeping with a strong rise in the value of the U.S. dollar by about a percent, and mixed results by country, with stronger results in Japan, helped by technology. Emerging markets were flattish on net, with technology-related gains in Taiwan as well as Brazil offset more tempered results elsewhere, as well as declines in South Korea and China.

Bonds were little-changed for the most part last week, with yield moves being mixed across the U.S. Treasury curve. However, unhedged international bonds were held back by a sharp rise in the value of the dollar. Debate continued over the U.S. government fiscal policy and recent actions by the Treasury to reduce long-term yields. A well-known investor noted in a piece last week that the long-term Treasury yield is the only ‘fiscal disciplinarian’ the US has left, implying higher rates could be what it takes to compel spending control.

Commodities moved in different directions, with gains in agriculture, as wheat and corn prices rose their highest prices in three years, due to lower supply expectations as well as concerns over exports from Ukraine in the midst of ongoing conflict. These was offset by weaker energy and precious metals, with the latter related to gold’s negative reaction to the stronger dollar. Crude oil prices declined by over -4% last week to $83/barrel, with little negative news from the Middle East, and hopes for a return to negotiations.



Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.