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What the Market?
Mr. Market will return after a refreshing long weekend of pounding Budweiser’s while riding a Bald Eagle to the tune of Born in the USA while setting off fireworks he bought from a vendor who gave him a high four (that’s how you know you got the good stuff)! Hopefully a more relaxed investor pool will help Mr. Market find direction after these hazy couple of weeks.
What’s driving the market?
Jobs Report coming in strong: Last week the US economy added another 850k jobs as wages rose. This report was the single-best employment gain in the past year, driving the unemployment rate down to 5.9%. Although the report was promising, the active labor force was unchanged at 61.6% (still below historical averages) which means millions of Americans have yet to return to the labor market. At this point in time, equity markets are taking the news in stride. However, too much good news might be bad for markets as it may lead to the Fed removing its unwavering support and tapering. The key here is balance. Investors are looking for good news, but not that much of it.
The more you know… Fed Minutes Edition: In a fairly uneventful short week for US markets, the central focus of data will be the FOMC’s June meeting minutes. Analysts hope to get some deeper understanding of where the Federal Reserve stands regarding potential tapering of their asset purchasing program and the eventual rise of interest rates. Investors should expect some mention of initial talks about tapering and a bit more depth into what the Fed defines as “further economic progress.” Numerous Fed officials have stated that the asset-purchasing program is great for igniting the consumption machine to the point that they now recognize that the issue is supply failing to meet the monetary policy induced spikes in demand.
What’s an investor to do?
Investor mindset
Be wary of the summer months, as the typically lower-volume season may erase some of your first semester gains. Start prepping ahead of schedule for an interesting earnings season and looking for new opportunities across value and growth sectors that have lagged this year.
Portfolio management
Don’t fret, nor panic, and take the slower days to read up on your portfolio companies as Q2 earnings season is right around the corner! Remember that good financial performances are almost as important as beating analysts’ expectations which means it’s important to gauge investor sentiments, particularly, when most companies are constantly expected to beat estimates. Make sure you know what a “good” earnings performance looks like prior to seeing what analysts say. Trust your companies and don’t be fooled by the banks and media!
Keep an eye on the economy
Aside from the Fed’s minutes from June, the ISM non-manufacturing Index is coming out today! The index gauges the sentiment of purchasing and supply managers at services companies across the country. With the current reopening and improving economic conditions, analysts expect demand to uptick. Particular attention to the heavily hit leisure, entertainment and hospitality segments. The big question this report should answer is how hard it has been for companies to find labor and match growing demand.
Economic Calendar:
Monday: Eurozone Services PMI
Tuesday: Eurozone retail sales, Bank of Australia Interest Rate decision, US Services PMI and Employment Index
Wednesday: Eurozone economic growth forecast, FOMC Minutes and monetary policy report, mortgage applications and JOLTS job openings report
Thursday: ECB special strategy meeting, US Jobless Claims
Friday: Chinese PPI and CPI, UK industrial and manufacturing production, ECB President speech
If you didn’t know, now you know
As US, UK, and NATO troops withdraw from Afghanistan after 20 years, violence has begun to rise. The Taliban has proceeded to press the Afghanistan’s military and taken control of nearly a third of the country with the government’s troops retreating.
This summary only covers the surface of the conflict. To read more, click here.
What we’re vibing:
Money Heist: A Netflix thriller about a criminal mastermind who has planned to print millions of Euro’s while holding the Spanish Mint hostage. *Binge Advisory* you may not turn this one off.
From Russia with Love #60 by Just Iggy by WTM community member and subscriber, Just Iggy, has done it again with a jamming nu-disco set that will have you dancing all night.
Resources
WTM Mentions Performance Tracker
A content guide to investing (books, books, books!)
Disclaimer
This writing is for informational purposes only and the author/s undertake/s no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. The author/s expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.