The Bottom Line
● Fears that growth has peaked weighed heavily on global equity indices for the second week of the month. Japanese equities were the lone bright spot, with the Nikkei up +4.30% for the week.
● Treasury yields ticked higher with the 2-Year gaining + 1bps, and the 10-Year gaining +2bps.
● A week shortened by the holiday left economic news on the lighter side, but JOLTS reached a fresh high, continuing jobless claims fell to a pandemic low, and PPI illustrated that inflation is still on its upward trend.
Growth Concerns Weigh on Markets
U.S. markets were closed for business on Monday to celebrate Labor Day and the end of summer. Unfortunately, as the weather begins to cool off, so have the equity markets. Major Wall Street banks have been posting warnings that growth has peaked and the continued spread of Covid-19 and its variants threaten any continued progress. Market participants seemed to heed their warnings with the S&P 500 falling -1.69%. The tech heavy Nasdaq was close behind it, falling -1.61%. Small Cap equities bore most of the selling pressure with the Russell 2000 falling -2.81% for the week. European equities weren’t spared from the selloff, as the STOXX Europe 600 lost -1.18% for the week. The European Central Bank announced that they would be “recalibrating” their asset purchase program, but not tapering or tightening their monetary policy. Market participants were skeptical over the semantics of their statement, and many felt that the actions described sounded a lot more like a taper rather than a recalibration. Investors were reminded on Friday that inflationary pressures are still a concern with PPI numbers hitting a 40-year high. Difficulty hiring laborers and supply chain bottlenecks were the main culprits for the index climbing and expectations are that prices will continue to rise in the coming months.
Digits & Did You Knows
LENDERS WANT TO LEND — 29% of “large” US banks have loosened the lending requirements they utilize to approve loans to corporations and to individuals during Q2 of 2021. “Large” banks are defined as having total domestic assets of at least $50 billion. (source: Federal Reserve Opinion Survey on Bank Lending Practices, BTN Research).
MOSTLY UP — If the S&P 500 can maintain a positive total return for all of 2021 (up +22.0% YTD as of 09/03/2021), it will be the index’s 17th positive annual return in the last 19 years.(source: BTN Research).
HALF THE COUNTRIES — 98 countries, equal to 50% of the 195 countries in the world, have agreed to accept refugees from Afghanistan. (source: State Department, BTN Research).
Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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