In This Month's Issue:
You can read the full Investment Perspectives here.
Prospecting For Gold
Mark Luschini, Chief Investment Strategist
It is a rare circumstance that in presentations to a large group of investors, a question about the prospects for gold isn’t raised. In this context, it centers on whether it is likely to move higher or lower or warrants a position in a portfolio. Historically, gold has had an intrinsic quality, namely its rarity, that has served the precious metal well for thousands of years as a currency or store of value and in art or jewelry. Today, we know it also has broad industrial applications for which it is employed in medical, aerospace, automotive, and electronics fields.
Gold has captured a lot of attention as it rallied to an all-time high in May, even generating a buying frenzy of gold bars that were being sold by a large, well-known hypermarket. Subsequently, its price advance has cooled a bit, which begs the question of what lies ahead. Are the catalysts for gold still in place, or have other variables intervened that might undermine its investment utility?
Overblown Liquidity Concerns
Guy LeBas, Chief Fixed Income Strategist
Violent market moves—such as the +0.15% no-news selloff in interest rates on the final day of June 2024—are often chalked up to “liquidity.” There’s some truth to that statement. In the last several weeks, a few headlines have emerged on deteriorating bond market liquidity. Specifically, one measure of liquidity based on a Bloomberg index (albeit flawed) seems to be weakening. The broader issue, however, is that bond markets have grown, intermediaries have shrunk, and popular trades have become ever more crowded. Nowhere is that more evident than on quarter-end dates in which rebalancing billions of dollars gets jammed into a single hour of activity.
Lazy, Hazy, and Sometimes Crazy
Gregory M. Drahuschak, Market Strategist
The second half of the year typically kicks off with golf courses and beaches occupying investors’ minds more than the performance of the S&P 500. The diversion away from the market, however, can be costly.
On average, July is by far the best summer month for stocks and the fourth-best month of the year overall. The S&P 500 in July posted a gain in 44 of the previous 74 possible months, with an average gain of 1.21%. The 9.11% gain in July 2022 was the best gain for the month.
