Investing in hedged equity strategies is a bit like running with the bulls: investors love the adrenaline rush of the Read More
July 1, 2017 |
What happened in June?
U.S. stocks (measured by the S&P 500 Index) moved slightly higher in June, +0.6%, mostly thanks to dividends paid out throughout the month. Investors seem to be in a “wait-and-see” posture, looking for signals from central banks amid strengthening economies. The lack of investor action has kept volatility (as measured by the CBOE Volatility Index) near all-time lows. Technology stocks, (measured by the iShares Dow Jones US Technology ETF) which have been the market’s best producer in 2017, suffered a mild setback in June experiencing a 3.4% loss. Overall, the S&P 500 Index is now +9.3% YTD. Across the globe, international stocks were relatively flat with the MSCI All-Country World ex-U.S. Index +0.3% in June and +14.1% YTD. With the second quarter in the books, focus now shifts to Q2 earnings reports.
Moving into July
A few of the consumer and producer sentiment surveys we monitor fell in June, providing enough rationale to raise cash throughout the month. The high sentiment that followed the election of Trump with discussions of pro-growth initiatives such as tax reform, accommodative trade policies and infrastructure spending has faded. The late-month pullback boosted valuation metrics, but equity valuations still remain near highs. We enter July with an opportunistic posture at 76% invested in our tactical U.S. strategies and 96% exposure outlook in our international strategies.
↓ Valuation | Stock price valuations remained in line with the prior month near decade highs at 21.5 P/E with a focus on Q2 earnings reports.
↔ Sentiment | UM Consumer Survey dropped for the 1st time since February and equity fund (SPY) experienced a 3rd straight month of outflows (-0.6% in June).
↑ Macroeconomic | Leading Economic Indicators hit their highest level for the year after the May reading while unemployment remains low and GDP estimates were revised higher.
↑ Technical | Short-term momentum staggered in late June as the S&P 500 Index traded just 1% above its 50-day moving average but remained 6% above the 200-day.
Important Disclosure Information
As of 6/30/2017. Data provided by Bloomberg, NorthCoast Asset Management.
The 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.
PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS.
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.
INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR’S PRINCIPAL.
The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties.