July 2016 Market Commentary

•    The post-Brexit market rally has soothed the currency migraines of June. 
•    The 10-year Treasury is off its lows of 1.37% immediately following Brexit to be at 1.59% today. 
•    Most earnings have been reported and on balance were positive. 
•    July jobs report were okay with 255,000 new jobs, and the posted unemployment rate was 4.9%. 
•    July was marked by lower volatility in the stock market than the “norm” for July. 
•    The S&P 500 gains more than 3% in July which leaves many to worry more about the month of August. August is traditionally a weak and volatile month. 
•    Derivative positioning is starting to be much more bullishly weighted. My being more of a contrarian makes me feel that this data might be indicative of effusive optimism in the stock market. Although, I am the worst market timer with whom I have ever been acquainted. 
•    Big S&P 500 ETF inflows crowned July 2016 as the third largest month since 2011. 
•    The U.S. Consumer remains resilient and keeps economy going, while oil prices have fallen off their recent highs of nearly $50/bbl. It seems clear that July is showing us that U.S. companies have generated superior returns on capital, despite the overall low growth environment. These better returns on capital are proven through the better earnings reported this month, and the commensurate prices of these stocks surge. 
•    The technology sector led all the sectors of the S&P 500 in July with blowout earnings. Multiple money managers and market technicians are now saying that we are in a secular bull market. While I don’t believe anyone is that good at calling market tops or bottoms, I do believe that stock prices are still climbing a wall of worry in August. We are nowhere near irrational exuberance or unbridled optimism. 

July Takeaway- Keep letting the positive global markets work for you. 

Best Wishes for the Remaining Summer

Zandy Campbell

Mark Scott

A.G. Campbell Advisory, LLC, 1340 Smith Avenue, Suite 200, Baltimore, MD 21209