China continues to be the driving force behind this week’s market action.
China claimed on Friday that their devaluation actions are completed, for now. Over the weekend all eyes were glued to the Iowa State Fair where the various candidates made their speeches to convince the Iowa voters to select them. The outstanding performance was that of Donald Trump who flew in on a helicopter and offered free rides to the kids. Others included a number of others from the Republican camp and from the Democratic side, Hillary Clinton and "challenger" from the Independent Party, Senator Bernie Sanders.
None of that pertains to the market action of the past week, but the back and forth "rhetoric" did take over the media and left us with no information to try to determine market action for the coming week. We will try to garner some pertinent information to guide our readers however...
The 30-year Treasury bond closed at 158 and 6/32nds up 1 10/32nds as consumer sentiment for August dropped slightly from 93.1 in July to 92.9. Economists had projected an early August index to be at 94.0. Without new data to base opinions on we have to remain on the sidelines but our negative approach to the U.S. economy could prompt additional "flight to safety" of Treasuries.
The Dow Jones industrials closed at 17,477.40, up 69.15 points or 0.4% and for the week gained 0.6%. The S&P 500 closed at 2,091.54, up 8.15 points in a "see-saw" market during the week gaining 0.7% for the week. The Tech heavy Nasdaq closed at 5,048.24, up 14.68 points or 0.3% with a weekly gain of only 0.1%. The markets experienced choppy action on light summertime volume and reacted sharply to the news of China yuan devaluation.
Friday’s "positively" construed economic data prompted the rally recovering early week losses. We once again strongly urge investors with large equity portfolios not to "take the ride" during what I see as a 15-20% correction in equities. Implement strategic hedging programs which I can assist with after over 45 years of "watching" market action.