Welcome to our Monthly Market Overview and Economic Summary for August, 2013. Stock markets have remained in a solid uptrend as the bond and commodity markets have softened.
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Monthly Market Overview and Economic Summary Transcript
Hello, this is Jon Soden for Magellan Financial with our first monthly market update, for August, 2013. This is a feature we hope to bring you on a monthly basis, including a short video update on the markets as well as supporting materials.
Taking a look at the stock market, things keep rolling along here in the dog days of summer. After a relatively shallow selloff during the month of June, July was a solid month of gains. We start August with the S&P500 at 1685 and the Dow Industrials just below 15,500, both up more than 18%. Overseas, European stocks markets have started to perk up as emerging markets remain tentative due to lower commodity prices and slower growth from China.
Bond yields are up but total returns remain negative, with the Barclays Aggregate Bond index showing a 2.32% loss so far this year. With continued talk of The Federal Reserve’s bond purchase program starting to wind down in the near future, we expect pressure to continue pushing yields up and bond values down.
Turning to the economy, even as existing home sales and total vehicle sales continue to remain strong, 2013 GDP Growth is only expected to grow at 2.5%. Unemployment continues to slowly fall as does the Federal Government’s deficit. Inflation is tame a current 1.8%. Going forward we are cautiously optimistic.
In our opinion, stocks are not overly expensive, but have two concerns going forward. First, we are heading toward the political season with a number of big issues that could derail the markets – the debate over the debt ceiling, change at The Federal Reserve, and funding for fiscal year 2014. Just as pressing is the slowdown of corporate earnings and revenues.
All year analysts have tempered their expectations at a time when we would expect to see growing of both the top and bottom lines. So far the markets have accepted this muted growth. We are skeptical this can continue on for too much longer.
Thank you for taking the time to listen. If you found this useful, please pass it along to your friends or family. And if you have any questions, please feel free to contact us by phone or via email. This is Jon Soden for Magellan Financial, wishing you a safe and prosperous August.