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What happened in September?
Global equities spent the 1st half of September in a gradual decline as an interest rate increase from the Federal Reserve appeared forthcoming. With macroeconomic data displaying a stable, growing economy, regulators have been seeking an opportunity to increase the rate at which institutions borrow money. However, the decision was made to keep interest rates in place. Since then, equities gained to close the month with positive momentum heading into 4th quarter.
For the month, the S&P 500 was relatively flat, moving +0.2% with international equities (ACWI ex U.S.) at 1.2%. The S&P 500 Index is now +7.8% YTD, while the ACWI ex-U.S. is +5.8%.
Moving into the 4th quarter
The majority of market-moving indicators remained bullish in September. Ending August with a 93% exposure to U.S. equities, we slightly decreased exposure as technical indicators weakened during the 2nd half of September. We enter October with a 90% U.S. investment level. In our international strategies, we maintained a bullish posture throughout the month and enter October 93% invested.
|Indicators that Remain Neutral||Indicators that Declined, but remain Positive||Indicators that Remain Positive|
Even though U.S. stock valuations remain stretched, they present a more attractive opportunity when compared against historical averages as well as against today’s interest-yielding alternatives.
The S&P 500 ended September in line with its 50-day moving average while 2% and 5% above its 100-day and 200-day moving averages, respectively.
The median household income jumped 5.2% over the previous year. There was a reduced number of jobless claims in August along with an increase of housing construction starts.
The UM Consumer Sentiment survey ticked up in September to its highest level since June.
The NorthCoast Navigator is a market “barometer” displaying NorthCoast’s current equity outlook. This aggregate metric is determined by multiple data points across four broad market-moving dimensions: Technical, Sentiment, Macroeconomic, and Valuation. The daily result determines equity exposure in our tactical strategies.
As of 9/30/2016. Data provided by Bloomberg, NorthCoast Asset Management.
This information contained herein has been prepared by NorthCoast Asset Management LLC (“NorthCoast”) on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions.
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This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
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