Market Index Returns September 2019
Dear Clients and Friends,
For the month of September, global stocks rallied +2.10%, the S&P 500 rallied +1.87%, emerging markets equities gained +1.91%, while the Barclays U.S. Aggregate Bond Index lost -0.53%, and Barclays 1-10 Year Municipal Index lost -0.73%. Markets bounced from the August low-point based upon hopes for progress on trade talks between the US and China. While both sides have offered conciliatory words market uncertainty remains high and the likelihood of a short term resolution is not strong.
In the meantime, there have been several shocking “negative” developments in the last two weeks. First a dramatic decline in US manufacturing PMIs which are now showing significant contraction, and secondly an unexpected “miss” in US employment data. These were followed by a larger than expected slowdown in service (non-manufacturing) PMI growth.
The New York Fed model is now showing a 38% probability of a recession in the next twelve months. Since 1960, the US has experienced a recession every time this indicator was 30% or higher, only missing once in 1967. See last chart in the appendix.
John Bailey and Michael Mahaffy
Spruce Investment Advisors LLC