Since our last market commentary blog (just before Labor Day) the markets have pretty much remained in a similar state, chopping around violently between overbought and oversold conditions based on the most recent trade and tariff tweets or announcements. Near the end of September we saw another 5.5% pullback in the S & P 500 which felt very similar to the August pullback. It seems like 5% pullbacks are par for the course given the geopolitical backdrop of late.
Our stance would remain status quo. It is our opinion that US equities are still the most attractive place to experience investment returns with the majority of this belief stemming from the fact that earnings are not showing a rolling over of the economic cycle yet. When considering which industry is driving the market, it is evident that the consumer is still strong regardless of the waining underlying economic indicators while the industrials/manufacturing sectors have been lagging the overall markets. This idea goes along perfectly with current stock performance as we have seen consumer goods companies like Apple, Lululemon, Coke, Roku, and a myriad of others outperform the indices.
Today the President is meeting with the Premier of China to discuss trade negotiations. The optimism is high as the President has been flying off on twitter sending hopeful signals. The S & P 500 is up approximately 1.75% before the markets close for the weekend; however, if there is anything we have learned from this market volatility that is to stay the course. Perhaps after the meeting this week and next with the Chinese we will have a better picture of how the trade war will either resolve or continue down the path of strategic negotiations.