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[Market Recap] Cup of Joe: July Market Update

Take a look at the July market recap from Joe Gallemore, CIMA® Partner & Director of Investment Management for Argent Bridge Advisors. Watch the video now!

Joe’s Notes:

June Market Results

  • June was a strong month for equities. S&P 500 +6.6%, Mid & Small caps over +8%, REITs came off the floor +5%.Bonds Retracted -0.4%.
  • Sentiment was risk-on as evidenced by stocks and bonds moving in opposite directions during June.
  • The market is floating to a precarious level.  Precarious because the index valuation and YTD returns seem overly optimistic given the direction of the underlying data. Yahoo Finance commented that market levels have become dislocated from the trend of economic data.
  • Indeed many economists are saying that despite the persistently good GDP and consumer spending reports, industrial economic activity is slowing and the risk of recession has actually risen over the past two quarters.
    • A closer look at this performance shows that it is being propped up by the performance of only a handful of names. Who are they? You guessed it… AAPL, GOOGL, MSFT and the like. Mega-cap, US tech stocks.  500.
    • Our advisors have talked about a concentration at the top of the index.  The top 10 stocks in the S&P 500 now comprise about 31.7% of the index, according to JPM.  This is up from around 20% only 5 years ago.  6 of those top stocks are tech stocks, 7 if you count AMZN.
    • Many investment strategists think the second half of 2023 will be marked by increased volatility and potentially a notable price correction.forward.
    • First, because that index concentration can be a double edged sword. If there’s a sell-off in only a few names, they can pull the market down with it.
    • Second, messaging from the Fed suggests that they may not be done raising interest rates. Rising rates is not only typically a headwind for strong stock returns, but rising rates may also spark volatility from unforeseen consequences, see regional banking crisis from a few short months ago.
      and corporate profits are not keeping up with it. Right now the market is acting very much like a voting machine, or actually a wishing well, than a weighing machine. Behavioral investing lessons: Moderate your expectations and manage your excitement.Don’t let the market at large give you FOMO and bait you into stepping out on the risk spectrum at exactly the wrong time.

Helpful reminder that, back in May, we reallocated some equity risk within our models to try and hedge some of the downside.  We have harvested cash for those with regular distributions.  Thank you for your continued confidence and please let us know if you have any questions at all!


Joe Gallemore, CIMA®, Partner

Argent Bridge