GREAT August performance!
August was another GREAT month for our portfolios – average gain was +2.8% while the S&P 500 saw a -1.8% decline.
Our defensive growth strategy continues to be solid in these turbulent times. Here are a few highlights we’re monitoring in economic/market events:
- Federal reserve: With the Fed’s upcoming mtg next week, most are expecting a 0.25% cut in the Fed Funds interest rate. I’m still surprised that the Fed hasn’t cut rates more aggressively and I’m concerned they’re behind the curve in addressing the looming economic slowdown ahead of us in 2020.
- Global economic slowdown: Most recent indicator of this was China’s decision to reduce the bank capital req’t by 0.50%. This is one of 3 typical tools that central banks use to influence economic conditions. The other 2 are: bank lending rates (referred to as the “overnight lending rate” for the US Federal Reserve) and brokerage margin req’t. The fact that China continues to add stimulus and liquidity to their economy shows the contraction that is occurring.
- The Washington Post recently published an article that highlight 9 countries that are on the verge of a bonafide recession (defined as 2 consecutive quarters of negative GDP growth): https://www.washingtonpost.com/business/2019/08/15/key-countries-are-verge-recession-driving-fears-us-could-follow/?noredirect=on
- This article bears concern as the following countries are identified: Germany, U.K., Italy, Mexico, Brazil, Argentina (a TOTAL mess right now), Singapore, South Korea, and Russia
- China Tariff situation: Oh my, this just doesn’t go away! Most recent news is that both countries have agreed to have face-to-face talks this month. I think the chances of getting a deal, even if short-term, have improved with China’s continued pain from our tariffs (their exports declined more than expected last month). This is a fluid situation, and markets are riveted by every little news clip (or tweet). Unfortunately, this appears to deflect investor’s attention from the underlying reality of a global economic slowdown upon us.
- Brexit: With Boris Johnson’s adamant pledge to leave the EU (European Union) on Oct 31st, even without a negotiated trade deal has this situation on tinder hooks. IF Britain actually leaves the EU without a trade deal with its EU partners, expect a market meltdown in the strongest way.
Thank you again for your continued trust in our firm as we navigate what is sure to be a volatile year ahead. Rest assured, your portfolio with us is strong and very defensive, as this summer’s performance has borne out. Please let me know if you have ANY questions or concerns about your individual portfolio and strategy!
Paul
Paul Wildberger, CFP®, MBA
President, Integrity Private Wealth Advisors, LLC
10000 N. Central Expwy #400
Dallas, TX 75231
214-729-1460
