Top Three Market Headlines
U.S. Manufacturing Index Dips: The preliminary August estimate for the IHS Markit U.S. Manufacturing Purchasing Managers’ Index (PMI) fell to 49.9 from 50.4 in the prior month. This was the first time in the past ten years the index has fallen below the neutral threshold of 50 that distinguishes expansion (above 50) from contraction (below 50) in the sector. The decline was largely attributed to weaker rates of new orders received by factories. Tim Moore, Economics Associate Director at IHS Markit, commented that “August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter.” The final August data for the IHS Markit index will be released on September 3rd, the same date the Institute for Supply Management will report its own manufacturing index.
Federal Reserve Meeting Minutes Released: Minutes from the Federal Reserve’s late-July Federal Open Market Committee meeting released last week provided clarity regarding the Fed’s decision at the meeting to cut interest rates. The Fed’s official post-meeting statement had indicated the 25 basis point rate cut was intended to insure the U.S. economy against downside risks from trade policy uncertainty and weak global growth. The minutes, which are closely scrutinized by investors and economists for clues about the Fed’s future actions, suggested the rate cut should be viewed “as part of an ongoing reassessment” of policy that began in 2018.
Investors Embrace Safe Havens: Investors around the globe have warmed to perceived safer assets amid fears about slowing global growth, trade tensions and increased volatility across financial markets. Government bond prices have enjoyed a significant increase since July, sending yields in Europe and the U.S. to all-time lows. Gold has also enjoyed a resurgence, rising nearly 20% year-to-date and hitting a six-year high. In addition, the only sectors in the equity market that have seen meaningful gains so far in August are those that offer higher dividends, including real estate, consumer staples, and utilities.
Data Points
- A U.S. manufacturing index points to contraction in the sector for the first time in 10 years.
- The Federal Reserve cut its federal-funds target rate range to 2.00% - 2.50% in late July.
- The spot price of gold closed last Friday at $1,504 per ounce, up from $1,279 on Jan. 1st.
|
As of August 23, 2019 |
Week |
Quarter-To-Date |
Year-To-Date |
One-Year |
|
MSCI All Country World |
-0.52% |
-4.03% |
11.55% |
-1.08% |
|
S&P 500 |
-1.42% |
-2.92% |
15.08% |
1.69% |
|
Russell 2000 |
-2.27% |
-6.68% |
9.17% |
-13.78% |
|
MSCI EAFE |
0.86% |
-4.69% |
8.68% |
-3.37% |
|
MSCI Emerging Markets |
0.37% |
-7.11% |
2.72% |
-4.71% |
|
FTSE NAREIT |
-0.83% |
2.76% |
21.03% |
11.49% |
|
Bloomberg Commodity |
-0.88% |
-4.20% |
0.65% |
-6.33% |
|
Barclays Aggregate |
0.08% |
2.60% |
8.87% |
9.78% |
PMI IHS Markit 08/22/2019 FOMC 08/21/2019 WSJ 8/19/2019; Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.