Week In Review

In a holiday-shortened week, market participants could feel the tension in the air as multiple Federal Reserve governors seemingly turned the page on inflation concerns and now appeared to be squarely focused on the challenge of sustaining economic growth. The financial markets perused the release of several economic indicators but found little evidence to help mitigate the sense of trepidation. The ISM Manufacturing Index was dismal, as twelve of the eighteen major manufacturing industries reported contraction in August. 3 The ISM Services Index managed to counter the bleak production data, but the tenth of a point gain was benign for sentiment. The Fed Beige Book for August added to slowdown fears as the number of districts with flat or declining activity rose from five in the prior period to nine in the current period. 4 The nonfarm payrolls report was also mixed, with job gains less than expected but a modest decline in the unemployment rate. In anticipation of interest rate cuts beginning this month, the relationship between the 2-year and the 10-year Treasury yield normalized after being inverted since June 2022. Sector rotation picked up steam in the equity markets as volatile information technology stocks sold off in favor of more defensive consumer staples and real estate categories. In a classic flight to safety, the S&P 500 dipped -4.3%.

This Week

While Fed Chairman Jerome Powell may assert that the central bank is attentive to the mandate of

maximum sustainable employment, the release of the Consumer Price Index on Wednesday will receive its due consideration prior to the Fed policy decision on the 18th of this month.

Portfolio Themes

Since 2002, an average of 33 of the top 50 performing companies each year are international. Consequently, having a “home bias” can be costly. Simplicity offers a curated roster of third-party managers that provide exposure to international markets that may boost long-term performance.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from J.P. Morgan Asset Management.

1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.

3 First Trust Advisors.

4 federalreserve.gov/monetarypolicy/beigebook. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication .