"Long ago, Ben Graham taught me that 'Price is what you pay; value is what you get.' Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." – Warren Buffet
Happy Monday!
I hope that all of you had a wonderful weekend and that you are enjoying the start of the new week ahead.
I spent the last 4 weeks mostly in both New York and Atlanta working in both the office and out in the field conducting diligence visits. The broad markets experienced another down and increasingly volatile week last week as the Q2 earnings season continued to wrap up. Eight of the 11 S&P 500 sectors finished lower this week. The energy sector was off the most or 3.9% even though oil rose 1% this week & the Financial sector was off 2.2% in line with the decline of the yield curve. The three sectors that moved higher were consumer staples up 1.6%, real estate up .3% and utilities up .5%.
An inversion of the yield curve, which temporarily occurred this past week, is typically a recessionary indicator. It certainly did its best to cause uncertainty and magnify the fears and beliefs of investors that global growth would decline. Subsequently, the markets swung wildly & down post its confirmation. However, the US economy then put forth the following data benchmarks over the course week that helped to combat these fears as many pointed to improvements, especially the retail sales report which showed a more than 2x improvement m/m, and the markets swung back.
The S&P 500 proceeded to move lower by 1% this week closing at 2,888.68 & still up 15.2% YTD. The Dow lost 1.5% this week ending at 25,886.01 but still up 11% YTD. The Tech-heavy Nasdaq gave back .8% over the week to end at 7,895.99 but still up 19% YTD and the Russell 2000 moved lower by 1.3% this week ending at 1,493.64 and remains up 10.8% YTD.
With the increased fear and subsequent selloff, volatility bets have been in favor again very recently, moving up & down significantly in a yo-yo like process, but on Friday they ended down again as the markets surged upward. The CBOE Volatility Index (VIX) closed lower at $18.47 down 12.80% but higher than last Friday's close up $17.97. The 2x leveraged ETF TVIX closed lower at $19.79 but higher than last week’s close of $18.81/share.
Thank you for reading PointFour’s Weekly Market Updates - we always strive to bring you interesting content, new understanding, and ideas. Please enjoy the next post, Stocks In Our View, where we highlight stocks that we think are worth looking into and news that you may have missed.
Thanks again for your consideration & for sharing your thoughts and ideas with us.
Best Regards,
Vinnie
Vincent M. Oddo
Managing Partner
PointFour Capital, LLC