Key Points
  • U.S. stocks indexes finally moved to new record highs—but not exactly in convincing fashion. The bull market continues but there are risks in the near-term that warrant a bit of caution.

  • The U.S. economy continues to look solid, but there are some troublesome signals that could mean a downtick in the growth rate. The Fed is adding to uncertainty as they deal with low unemployment, modest but rising inflation, and trade issues.

  • China’s decision to support its currency was a good sign, but there are still risks to the country which could impact the global economy.

“Of all the American educational system’s problems, none is more severe than the academic year beginning before Labor Day.”
- P.J. O’Rourke

Short…but only partially sweet

With the unofficial end of summer staring us in the face, we thought this week’s report would be short and to the point—so you can get out and enjoy one last weekend of fun!

The bull market continues but there are warning signs that near-term pullbacks are becoming more likely. Perhaps the most telling quote over the past couple of weeks was Target’s CEO telling CNBC that, “We’re benefitting from a very strong consumer environment—perhaps the strongest I’ve seen in my career.” While positive, it’s that sentiment that gives us pause as it’s begun to carry over into investor sentiment—and at extremes, they can be contrarian market indicators. Although U.S. stocks recently hit an all-time high, leadership groups have continued to be more defensive in nature. Telecom and health care have outperformed over the past month, while more cyclical groups like industrials, materials and energy have underperformed.