“You Retire Once… I Help People Retire Everyday”
After a brief pause earlier this summer, equity markets picked up speed again in July, extending their lead over bonds. For the past several years, markets have followed a familiar pattern: a sudden shock causes a sharp drop, followed by a strong rebound that often proves more durable than expected once policymakers step in. This year appears to be no exception.
The U.S. economy remains in solid shape. In the heart and back half of earnings season, corporate profit expectations have stabilized—and in most cases improved—while the labour market continues to hum along in balance although showing signs of weakening. Perhaps the most encouraging news, and one that hasn’t received as much attention, is inflation. The CITI InflationSurprise Index recently hit its lowest level in nearly a decade, indicating that price growth has been much milder than many had forecast.
The progress and developments on easing inflation accompanied with a less heated job market could give the Federal Reserve room to slowly move interest rates closer to neutral over the coming quarters. This would be positive for both the stock and bond markets.
While I wouldn’t be surprised to see a modest equity pullback in the short term, the bigger picture remains constructive. Healthy economic fundamentals, calmer inflation, and the potential for a more supportive Fed stance create meaningful tailwinds.
All told, I continue to believe that stocks are likely to end the year higher—perhaps by a decent margin—despite elevated valuations pointing to amore measured pace of gains ahead.
Click below to read my full issue of “Monthly Market Perspectives” and what I believe what investors need to know. Not only do I recap the events that transpired in the month of July, but I also look ahead to help investors make sense of the potential road ahead. Additionally, I uncover the fear of new heights that investors often have when investment markets are at or near all-time highs and put a spotlight on an issue that is growing faster than both inflation and income. Hint: its everyone’s least favourite expense.
No matter what the headlines read or how the markets move in the short term, please know that my focus remains firmly on you and your long-term financial success. I'm here to help you stay grounded, keep emotions as it relates to your financial future in check, provide you the tools to make informed decisions, and adjust when needed—always with your best interests at heart. Together, we will navigate the ups and downs and continue building toward the future you've envisioned.
As always, thank you for reading and be sure to enjoy the last few weeks of summer.
-AP
