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August Market Preview Thumbnail

August Market Preview


If you feel like you are walking through a fog as it relates to markets – welcome to August. Often the slowest month of the year, it blends into September in a way where it feels like it lasts about six weeks instead of four. Playing into the slow feel of August, July ended with roughly $19 trillion held by consumers outside the stock market meaning that consumers are not feeling overly bullish as we move through summer, which isn’t unusual.

Anticipating the Bipartisan Infrastructure Bill

infrastructure bill

In recent weeks, the US Senate has been working hard to finalize their bipartisan infrastructure bill. Of the $1 trillion infrastructure bill, $550 billion will be new spending, while the rest will be from previously approved funding. The goal of the bill is to upgrade America’s roads, bridges, and broadband networks. Some in the Senate claim that this bill is already funded through the coming reduced spending on unemployment. But if the benefit was set to drop off, would that money have been spent? We are yet to truly confirm how the bill will be paid.

Q2’s Surprising Theme

I am pretty sure “surprise” will be the most typed word this earnings season. As of July 25th, 88% of companies have beat projected Q2 earnings, and earnings growth is potentially the best since 2009. Based on how things are unfolding we could see the trend continue into Q3. 

Inflation & Impacts of the Pandemic

The Fed has had a steady stance that the inflation we are seeing now is transitionary and that there is no need for the central bank to change policy. Unemployment continues to drop and the labor market is improving, but it’s a slow process and the Fed will not tighten policy unless these continue to improve.

Despite inflation concerns and some higher costs, net profit margins are on the rise to the tune of over 12% in the S&P 500.

With CDC rolling back mask mandates and the looming risk of the Delta variant, the pandemic still poses uncertainty for the immediate future. 

Preparing for the Ride

We’re in for a long few weeks as August crawls by. You’ll likely see lots of doom and gloom in the media surrounding COVID spikes, while Q2 earnings continue to come in at record rates. Don’t buy into the hype and keep your focus on the long-term.

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