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Chasing the Clouds Away

September 08, 2021

Equity markets were mixed this week as hiring data disappointed analysts. Nonfarm payrolls came in well below expectations, registering only 235K new hires against the expected 720K. Unemployment rates managed to meet expectations, coming in at 5.2%. Encouragingly, PMI data came in positive, with services meeting expectations and manufacturing exceeding expectations. Overall, the economy is well positioned to continue recovering from pandemic lockdowns, but inflation risks as well as labor challenges and limited production capacity are eating into productivity. In addition to macroeconomic factors, rising COVID infections also risk slowing economic progress.

Overseas, developed markets underperformed emerging markets, with both indices returning positive performance. European indices were mixed, while Japanese markets returned positive performance for the week. Improving prospects against the pandemic as well as improved prospects for economic recovery should continue to help lift markets globally over time.

Equity markets were mostly positive this week as investors continue to assess the state of the global economy. While fears concerning global stability and health overall appear to be in decline, the recent volatility serves as a great reminder of why it is so important to remain committed to a long-term plan and maintain a well-diversified portfolio. When stocks were struggling to gain traction last month, other asset classes such as gold, REITs, and US Treasury bonds proved to be more stable. Flashy news headlines can make it tempting to make knee-jerk decisions, but sticking to a strategy and maintaining a portfolio consistent with your goals and risk tolerance can lead to smoother returns and a better probability for long-term success.

Chart of the Week

Speculation predicting the decline of copper prices appears to be in decline. Copper has retreated from all time highs in recent months, but hedge fund managers are positioning themselves away from short exposure to the industrial metal. Higher copper prices tend to be indicative of healthy manufacturing activity and demand, as it is a commonly used raw material.


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