Freedom Capital Management September Market Update (Click for full article)

by Guy Woolley | Sep 14, 2021 | Finance

September 11, 2021

As a portfolio manager I try to keep my emotions out of our trading. I rely on market indicators to signify the strength of the markets. I have mentioned in past newsletters how certain months in the market historically underperform. Well, two of the months July and August, are over. The surge with the Corona Virus is concerning but hasn’t affected the Markets. My concern now is that the indicators that I rely on for market strength are indicating declining market strength. Nothing that is alarming, but it is noticeable. First to notice is the decline in trading volume, but reduced volume is normal during summer months. Also, there are less stocks trading above their 200-day moving average than last month. Last month’s reading was 83% this month is 73%. This indicator has been declining since April. The Advance/Decline line is weakening. And the VIX Index has been rising since June 29^th. Markets don’t go up forever, they just seem to be slowing down, for now. The markets are still trading near the all-time highs!

Below is a Year to Date (YTD) chart of the Nasdaq 100 ETF, “QQQ.”

Markets can turn on a dime quickly, for now I remain encouraged by the overall upward direction.

The VIX Index closed at 20.95 on Friday 9/10.  The VIX is rising and while the market trades lower. A falling VIX is bullish for the markets.  I prefer the VIX below 20 and a VIX below 15 is even more bullish.

Percent of stocks above their 50 day and 200 day moving average: Last month 62% of stocks were above their 50-day moving average, this month 50% are above their 50-day moving average. Last month 83% of the stocks are above their 200-day moving average, today 73% are above their 200-day moving average.  When 60% of stocks are above their 200-day moving average and the 50-day is rising, that is bullish. It would be a sign of strength if the stocks above their 50-day moving average begin to rise higher.

Federal Reserve:  The next FOMC meeting announcement will be September 22^nd. A comment from the FOMC press release from July 28^th: “The path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy but risks to the economic outlook remain”.

Unemployment Rate: Total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate declined by 0.2 percentage point to 5.2 percent, the U.S. Bureau of Labor Statistics reported on Sept 3, 2021. So far this year, monthly job growth has averaged 586,000. In August, notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month.t

Inflation Rate: The annual inflation rate for the United States is 5.3% for the 12 months ended August 2021, following two straight 5.4% increases, according to U.S. Labor Department data published September 14. The next inflation update is scheduled for release on October 13 at 8:30 a.m. ET. It will offer the rate of inflation over the 12 months ended September 2021.

The 10-year Treasury index yield: Is at 1.27%, not much change from last month at 1.29%.

Overall, the markets have an upward bias, trading near new highs recently, and continue to show strength, buy trading is choppy with an increasing VIX index rating. I would suggest caution at this time.

NOTE: To view past Market Newsletters, go to www.freedomcapitalmanagement.com and on the home page you will see recent newsletters and for older newsletters go to the blog page tab at the top of the home page.

In this month’s recap: Stocks rallied, fueled by an improving labor market, strong corporate earnings, and clarity on Fed tapering plans.

Monthly Economic Update

Presented by Guy Woolley, September 2021

U.S. Markets

Signs of an improving labor market, strong corporate earnings, and more clarity from the Fed on its tapering plans propelled stocks to multiple record highs during August.

The Dow Jones Industrial Average gained 1.22 percent while the Standard & Poor’s 500 Index rose 2.90 percent. The Nasdaq Composite led, picking up 4.00 percent.¹

Corporate Earnings

Corporate profits in the second quarter were by all measures exceptional. With 98 percent of companies in the S&P 500 index reporting, 89 percent beat Wall Street consensus estimates by an average of 17.7 percent. The companies posted an earnings-per-share growth of nearly 92 percent over the second quarter of 2020.²

The labor market also showed signs of improving health, providing evidence that the economic recovery remained intact. In August, jobless claims reached pandemic lows, while employers added 953,000 jobs in July, and job openings reached record levels.³

Fed at Center Stage

In the final days of trading, Fed Chair Jerome Powell stated that the Fed might begin to pare back its monthly bond purchases before year-end. Powell’s update followed multiple comments from regional Federal Reserve Bank presidents indicating their support for reducing bond purchasing. It’s important to note that Powell said that tapering should not be seen as an indicator of future changes in interest rates.⁴

COVID Worries

The month was not without its worries. The global spread of the Delta variant resulted in flashes of investor anxiety that led to temporary pullbacks in stock prices. New COVID-19 cases in the U.S. rose throughout August, raising concerns that spreading infections could derail the economic recovery.⁵

In Asia, outbreaks closed some shipping ports. Vietnam partially halted manufacturing, and Japan extended its lockdown protocols. These actions raised concerns about their supply chain impact and what it may mean for inflation and economic growth.

Sector Scorecard

For the second straight month, energy was the only industry sector under pressure. Energy lost 1.34 percent in August. Otherwise, gains were posted in Communication Services (+3.52 percent), Consumer Discretionary (+1.54 percent), Consumer Staples (+0.83 percent), Financials (+5.28 percent), Health Care (+2.45 percent), Industrials (+1.39 percent), Materials (+2.19 percent), Real Estate (+2.20 percent), Technology (+4.1 percent), and Utilities (+4.02 percent).⁶

What Investors May Be Talking About in September

Since the early days of the pandemic, Fed Chair Jerome Powell has maintained that accommodative monetary policies would remain unchanged until the economy recovered. He’s been clear that the Fed would be very transparent in communicating monetary policy changes well ahead of implementing them to allow the capital markets sufficient time to digest any change.

Comments by a number of Federal Reserve Bank regional presidents last month may have heralded the beginning of a communication plan.

First, the Federal Reserve Banks of Atlanta and Richmond made comments, suggesting that the time to begin tapering was nearing. This was followed days later by remarks from the Federal Reserve Banks of Dallas and Kansas City, indicating that the economy had progressed enough to commence tapering as early as October.^7,8

Talk of tapering grew louder with the August 18th release of the FOMC (Federal Open Market Committee) meeting minutes, suggesting that the Fed may be ready to scale back its bond purchases before year-end.

Finally, a speech by Fed Chair Jerome Powell near the end of the month confirmed that the Fed was getting closer to the start of tapering. Powell indicated that tapering could begin before year-end in his prepared comments, though he cautioned against connecting tapering with an interest rate hike.⁹

For many market observers, the Fed appears to be signaling that its September meeting may lead to changes in language and policy. The two-day meeting ends on September 22nd.

T I P O F T H E M O N T H

If you’re shopping for a homeowner policy, feel free to ask for a discount. If you can demonstrate that you are taking steps to manage risk, you may be able to negotiate one.

World Markets

A strong U.S. equity market helped push international stocks higher, with the MSCI-EAFE Index advancing 1.60 percent in August.¹⁰

In Europe, Germany tacked on 1.87 percent, the U.K. added 1.24 percent France picked up 1.02 percent.¹¹

The Pacific Rim markets were mixed. Japan rose 2.95 percent and Australia rose 1.92 percent. But China’s Hang Seng index and Korea’s KOSPI edged lower.¹²

Indicators

Gross Domestic Product: The pace of economic growth in the second quarter was revised upward slightly, from 6.5 percent to 6.6 percent annualized rate.¹³

Employment: Employers added 943,000 new jobs in July—the biggest jump since August 2020. The unemployment rate fell to 5.4 percent, down from June’s 5.9 percent rate.¹⁴

Retail Sales: Retail sales cooled in July, falling 1.1 percent, led by a decline in auto purchases. Retailers attributed the weakness to the spread of the Delta variant.¹⁵

Industrial Production: Output at the nation’s factories, mines, and utilities rose 0.9 percent, led by a 1.4 percent rise in manufacturing production. July’s result topped the consensus estimate of a 0.5 percent increase.¹⁶

Housing: Housing starts slid 7.0 percent as challenges with land, labor, and materials persisted.¹⁷

Existing home sales rose 2.0 percent as limited inventory and strong demand drove the median price higher by nearly 18 percent to $359,900 from July 2020.¹⁸

For the first time in four months, new home sales rose, increasing 1.0 percent as the median sales price jumped 18.4 percent to a record level of $390,500.¹⁹

Consumer Price Index: Consumer prices climbed at their fastest rate since 2008, rising 0.5 percent in July and by 5.4 percent year-over-year.²⁰

Durable Goods Orders: New orders of goods designed to last three years or more declined 0.1 percent in July, dragged down by a nearly 50 percent drop in nondefense aircraft and parts.²¹

Q U O T E O F T H E M O N T H

“Perform at your best when your best is required. Your best is required each day.”

JOHN WOODEN

The Fed

Minutes from the July 27-28 FOMC meeting revealed that some appeared ready to slow the pace of monthly bond purchases by the end of the year.²²

“Various participants commented that economic and financial conditions would likely warrant a reduction in coming months,” according to the minutes.

“Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year because they saw prevailing conditions in the labor market as not being close to meeting the Committee’s ‘substantial further progress’ standard or because of uncertainty about the degree of progress toward the price-stability goal.”²³

Sources: Yahoo Finance, August 31, 2021.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

T H E M O N T H L Y R I D D L E

What do the words Potato, Voodoo, Grammar, Revive and Banana have in common?

LAST MONTH’S RIDDLE: An auto dealership sold 150 cars in a special 6-day tent sale offer. Each day the dealership sold 6 more cars than the day before. How many cars were sold on the 6th day?

ANSWER: 40 cars. On the first day, the company sold x cars. On the second day, x + 6, on the third day, x + 12, on the fourth day, x + 18, on the fifth day, x + 24, and on the sixth day, x + 30. If you add all the days together you get the equation: x + (x + 6) + (x + 12) + (x + 18) + (x + 24) + (x + 30) = 150 cars sold. 6x + 90 = 150 and so x = 10. So, on day 6 (x + 30) = 40.

Guy Woolley may be reached at 415-236-5364 or [email protected]
www.freedomcapitalmanagement.com

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

«RepresentativeEmailDisclosure»

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalization in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprising 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1. WSJ.com, August 31, 2021

2. Twitter.com/EarningsScout, August 26, 2021. 490 companies S&P 500 companies reported through August 26.

3. WSJ.com, August 26, 2021

4. WSJ.com, August 27, 2021

5. CDC.gov, August 27, 2021

6. Sectorspdr.com, August 31, 2021

7. Reuters.com, August 9, 2021

8. WSJ.com, August 11, 2021

9. WSJ.com, August 27, 2021

10. MSCI.com, August 31, 2021

11. MSCI.com, August 31, 2021

12. MSCI.com, August 31, 2021

13. CNBC.com, August 26, 2021

14. WSJ.com, August 6, 2021

15. WSJ.com, August 17, 2021

16. MarketWatch.com, August 17, 2021

17. Bloomberg.com, August 18, 2021

18. WSJ.com, August 23, 2021

19. Bloomberg.com, August 24, 2021

20. WSJ.com, August 11, 2021

21. WSJ.com, August 25, 2021

22. WSJ.com, August 18, 2021

23. FederalReserve.gov, July 28, 2021

Technical and Economic Update

by Guy Woolley | Nov 14, 2019 | Finance

September 8, 2019

The chart above is the S&P 500 Exchange Traded Fund (SPY). The Red “V” marker on the chart marks the “breakout” that occurred on Thursday, September 5^th. As you can see the index had been in what we call a “trading range” for 23 days, as indicated between the upper and lower black horizontal bands on the chart. Breakouts out are important. They indicate a break from the trading range, in this case to the upside. Breakouts can and do fail. A “failed breakout” happens if traders don’t continue to push the market, in this case higher. If we continue higher most likely we will test the previous time high that occurred on July 26^th. Traders will be watching closely over the next few trading days. If the breakout fails, we will be back in the trading range.

Possible reasons for the breakout: China’s Ministry of Commerce spokesman Gao Feng has suggested Beijing will not immediately retaliate to America’s latest tariffs, when they kick in on Sunday. Gao told reporters that China was focused on ending the trade war, not escalating it, saying: “China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war,” “China is lodging solemn representations with the U.S. on the matter.” (As reported buy The Guardian 8/29/19). And as reported by Reuters Business News on August 28, Hundreds of retailers, footwear companies and business groups urged Trump to scrap the proposed tariffs, warning they would jack up consumer prices and trigger job losses. More than 200 U.S. footwear companies on Wednesday said the added 15% duties on shoes would come on top of tariffs that already average 11% and reach 67% on some shoes, boosting costs for consumers by $4 billion every year. “Imposing tariffs in September on the majority of all footwear products from China – including nearly every type of leather shoe – will make it impossible for hardworking American individuals and families to escape the harm that comes from these tax increases,” the companies wrote in a letter to Trump. More than 160 other business groups, including the National Retail Federation, Retail Industry Leaders Association and Association of Equipment Manufacturers, also urged Trump to postpone the tariffs, warning they would hit Americans in the middle of the busy holiday shopping season.

The VIX Index hit a recent low on Friday at 14.91 after reaching a high of 24.81 on 8/5. A lower VIX is an indication that the markets could go higher. I prefer to see the VIX under 15.

Percent of stocks above their 50 day and 200 day moving average. 43% of stocks are above their 50-day moving average and 45% of the stocks are above their 200-day moving average, which is slightly higher than last month. I prefer to see 60% or more stocks above their 200-day moving average.

Federal Reserve: The next FOMC meeting is on September 17 & 18.

Unemployment Rate: Holding steady at 3.7%

Overall, watching to see if the breakout continues to move the markets higher.

In this month’s recap: stocks descend as traders respond to the devaluation of the Chinese yuan as well as new developments in the ongoing U.S.-China trade talks; the price of gold rises, and bond yields fall.

Monthly Economic Update

Presented by Guy Woolley, September 2019

THE MONTH IN BRIEF

The stock market had a tumultuous August, reacting to the sudden devaluation of the Chinese yuan and the escalation of the trade dispute between the U.S. and China. Ultimately, investors seemed more interested in risk aversion: the S&P 500 lost 1.81% for the month. Demand for bonds helped to send Treasury yields lower; prices of precious metals climbed. Away from the markets, monthly personal spending and retail sales gains were strong.¹

DOMESTIC ECONOMIC HEALTH

Tariffs and trade issues remained front and center in the Wall Street conversation. On August 1, the White House announced a 10% import tax on an additional $300 billion of Chinese goods coming to U.S. shores. (Most of these products are so-called “final” consumer goods, like clothing and shoes.) In a nod to importers and retailers, the White House stated on August 13 that this 10% tariff would be delayed until December 15 for certain products: toys, consumer electronics, and other items that are big sellers during the holiday shopping season. Effective December 15, tariffs will impact nearly all Chinese imports to the U.S.²

China soon retaliated, and the U.S. quickly responded. On August 25, China unveiled a plan to place tariffs on an additional $75 billion of U.S. goods. As part of the plan, import taxes on American-made cars and trucks would jump by 30%. Just hours later, the White House announced that the tariffs planned for September 1 and December 15 would rise by 5% to 15%, respectively, and that the 25% tariff currently in place on $250 billion of Chinese imports would rise to 30% on October 1.²

A few summer statistics from Main Street seemed to contradict anxieties that the economy might be slowing down. Consumer spending advanced 0.6% in July, and that complemented July’s 0.7% gain in overall retail sales. Core retail sales (which exclude auto and gas purchases) were up 1.0% in the seventh month of the year.^3,4

A key measure of consumer confidence seemed strong: the Conference Board’s monthly index was at 135.1 in August, beating the 129.5 consensus forecast of a Reuters poll of economists. The CB’s present situation sub-index (surveying consumers’ view of the economy right now) hit 177.2, the best reading since November 2000.^3,5

All this said, other indicators hinted that manufacturing activity might have hit a soft patch. The Institute for Supply Management’s Purchasing Managers Index for the factory sector declined to half a point to 51.2 in July, and the federal government reported July retreats of 0.2% for industrial output, 0.4% for factory production, and 0.4% for core durable goods orders, which do not include the volatile transportation category (total durable goods orders, however, were up 2.1%). ISM’s monthly PMI for the service sector also lost ground, slipping 1.4 points in July to 53.7.⁴

The labor market added 164,000 net new jobs during July, according to the Department of Labor. (The revised June number: 193,000.) Unemployment remained at 3.7%. The U-6 rate, which counts both the unemployed and underemployed, fell a respective 0.2% to 7.0%.⁴

The Bureau of Economic Analysis delivered its third (“final”) estimate of second-quarter economic growth in late August: 2.0%. That number beat the 1.9% consensus forecast of economists polled by MarketWatch.³

Federal Reserve Chairman Jerome Powell’s spoke on August 23 at the Kansas City Fed’s annual Jackson Hole banking conference. Powell said the Fed was “carefully watching developments” and would “act as appropriate” if U.S. economic conditions weaken. The next Fed policy meeting is less than two weeks away. Wall Street wonders if Fed policymakers might be inclined to make a rate cut; comments from multiple Fed officials at Jackson Hole did not point to a consensus on that matter.⁶

GLOBAL ECONOMIC HEALTH

On August 5, China shocked financial markets worldwide by devaluing its main currency, the yuan, to a level unseen since the 2008 credit crisis. The rationale for this move was clear: by cheapening the yuan, China could make its exports more affordable for American buyers, effectively countering tariffs. Reaction on Wall Street was swift: U.S. stocks had their worst day of the year. The Department of the Treasury immediately called China a “currency manipulator.” With China’s economy growing at its slowest pace in 30 years, this could invite greater inflation.⁷

In another surprise, Boris Johnson, the United Kingdom’s Prime Minister, announced that Queen Elizabeth had agreed to a sudden, outside-the-box political idea. On August 28, Johnson said that he had asked the Queen to suspend Parliament for a month beginning in mid-September, with U.K. lawmakers reconvening on October 14. That would give Parliament two weeks to consider and approve a Brexit strategy. A no-deal Brexit – the kind Johnson favors – may have a better chance of passage under such a tight timeline.⁸

Also notable: the decline in government bond yields in key countries. Demand for bonds has sent prices of government-issued notes higher, and as a result, their interest rates have declined. Last month, roughly a quarter of the global bond market was invested in government notes bearing negative yields.⁹

WORLD MARKETS

Many foreign indices took August losses, but there were some exceptions. In Russia, the Moex advanced 0.20%, and in Canada, the TSX Composite gained 0.22%. Mexico’s Bolsa registered a major August gain, rising 4.31%.¹⁰

The emerging markets were hard hit last month. In fact, MSCI’s Emerging Markets index took a 5.08% fall. MSCI’s World index lost 2.24%. Hong Kong was beset by unrest, and its Hang Seng benchmark dove 8.60% for the month. China’s Shanghai Composite fell 2.24%; South Korea’s Kospi, 3.48%; the Singapore STI, 7.28%. Even Japan’s Nikkei 225 slipped 4.63%. European benchmarks were also mostly in the red: Spain’s IBEX 35 was 1.93%; Germany’s DAX, 1.71%; the FTSE Eurofirst 300, 1.55%. The United Kingdom’s FTSE 100 tumbled 5.75% last month. France’s CAC 40 lost just 0.56%. Two losses to note in South America: Brazil’s Bovespa declined 0.67%, and Argentina’s Merval slid 41.49%.^10,11

COMMODITIES MARKETS

At the closing bell on the month’s last trading day (August 30), an ounce of gold was worth $1,529.20 on the New York Mercantile Exchange; an ounce of silver, $18.48. Gold gained 7.76% in August, and silver, 12.92%. Another key precious metal, platinum, advanced 6.86%. One of the world’s key semi-precious metals, copper, fell 4.43% last month.¹²

West Texas Intermediate crude oil ended August at $55.16 per barrel on the NYMEX, down 4.72% on the month. The value of unleaded gasoline fell 19.68%. Heating oil lost 6.42%, but natural gas increased 1.83%. Turning to crops, losses were prevalent: soybeans lost 0.61%; coffee, 5.23%; cotton, 6.86%; wheat, 7.50%; cocoa, 7.53%; sugar, 8.19%; corn, 10.81%. The U.S. Dollar Index rose 0.41% for the month to 98.92.^12,13

REAL ESTATE

Mortgage rates went lower in August, influenced by declining bond yields. In Freddie Mac’s August 29 Primary Mortgage Market Survey, the interest rate for the average 30-year, fixed-rate home loan was 3.58%. A 15-year, fixed-rate home loan carried an average interest rate of 3.06%. Back on August 1, they were respectively at 3.75% and 3.20%.¹⁴

30-year and 15-year, fixed-rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.

As for home buying, the National Association of Realtors said that existing home sales improved by 2.5% in July, a nice change from the 1.3% (revised) retreat of June. According to the Census Bureau, new home sales fell 12.8% during July, as opposed to a 20.9% climb a month earlier.⁴

The latest 20-city S&P/Case-Shiller Home Price Index (June) measured 2.1% year-over-year home price appreciation, down from 2.4% in the prior edition. Housing starts fell 4.0% in July, but the Census Bureau did report an 8.4% increase for building permits.⁴

T I P O F T H E M O N T H

Some insurers are now offering usage-based auto insurance. If you happen to drive less than 10,000 to 15,000 miles a year, you may be eligible for a discount on your policy.

LOOKING BACK, LOOKING FORWARD

August was notable for its volatility. The S&P 500 gained or lost 1% during nine of the first 17 trading days of the month. (Back in 2017, there were eight such trading sessions all year.)¹⁵

All three of the major U.S. equity indices lost ground last month. The S&P ended August at 2,926.46; the Dow Jones Industrial Average, at 26,403.28; the Nasdaq Composite, at 7,962.88.^16-18

Sources: cnnbusiness.com, wsj.com, treasury.gov – 8/30/19^16-20

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year Treasury yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond.

With the third quarter about to give way to the fourth, investors are mulling a few questions. Can the U.S-China tariff fight be resolved this year or next? Is the economy actually showing signs of decelerating? Will Treasury yields stabilize? What will the Federal Reserve do? The answers to some of these questions may take months to surface. This month, Wall Street may see more of the choppiness that characterized August. The market is still a few weeks away from the next earnings season, so fundamental economic indicators (hiring, consumer spending, consumer confidence, manufacturing and service sector growth, retail sales) may exert some influence on stocks. Investors worldwide are waiting to see what direction the Fed will take with interest rates when it meets on September 17-18.

Q U O T E O F T H E M O N T H

“The whole point of being alive is to evolve into the complete person you were intended to be.”

OPRAH WINFREY

UPCOMING RELEASES

Here are the major scheduled news items and events for the rest of the month: the August ADP employment report and Challenger job-cut report (9/5), the Department of Labor’s latest monthly jobs report (9/6), the August wholesale inflation numbers (9/11), the August consumer inflation reading (9/12), August retail sales and the preliminary September University of Michigan Consumer Sentiment Index (9/13), the next Federal Reserve monetary policy announcement and subsequent press conference, plus numbers on August housing starts and building permits (9/18), August existing home sales (9/19), the Conference Board’s September Consumer Confidence Index (9/24), August new home sales (9/25), August pending home sales and the federal government’s third estimate of second-quarter economic expansion (9/26), and then August consumer spending and durable goods orders, plus the final September University of Michigan Consumer Sentiment Index (9/27).

T H E M O N T H L Y R I D D L E

During what month do people sleep the least, on average?

LAST MONTH’S RIDDLE: I am very strong and tough, but never rigid. I can be broken, but only in a certain sense. What am I?

ANSWER: Your heart.

Guy Woolley may be reached at 415-236-5364 or [email protected]

www.freedomcapitalmanagement.com

Know someone who could use information like this?

Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

«RepresentativeEmailDisclosure»

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index^® (VIX^®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx^®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The MOEX Russia Index (previous name – MICEX Index) is a cap-weighted composite index calculated based on prices of the most liquid Russian stocks of the largest and dynamically developing Russian issuers presented on the Moscow Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The Korea Composite Stock Price Index or KOSPI is the major stock market index of South Korea, representing all common stocks traded on the Korea Exchange. The FTSE Straits Times Index (STI) is a capitalisation-weighted stock market index that is regarded as the benchmark index for the Singapore stock market. It tracks the performance of the top 30 companies listed on the Singapore Exchange. The Nikkei 225, more commonly called the Nikkei, the Nikkei index, or the Nikkei Stock Average, is a stock market index for the Tokyo Stock Exchange. The IBEX 35 is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange. The DAX is a blue-chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The Bovespa Index is a gross total return index weighted by traded volume & is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The MERVAL Index (MERcado de VALores, literally Stock Exchange) is the most important index of the Buenos Aires Stock Exchange. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

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