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.

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↓ 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 1^st time since February and equity fund (SPY) experienced a 3^rd 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.

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As of 6/30/2017. Data provided by Bloomberg, NorthCoast Asset Management.

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