Market Digest
8.19.15
Observations
Enjoy The Last Few Days of Summer
Summer
"We are witnessing wave upon wave of tensions in global financial markets, turbulence that spreads like wildfire from one part of the world to another. Have economic fundamentals changed so suddenly, so substantially, and simultaneously throughout the world? Or is the loss of confidence that was understandable in some, I repeat, some countries, being transferred indiscriminately to all markets, emerging and established alike?"
 
This was the beginning of a speech given by Michel Camdessus, Managing Director of the International Monetary Fund, in September 1998 addressing the crisis in emerging markets. But after the lows of 1998, Emerging Markets experienced a strong recovery.
 
For the 16+ years after this speech was given (September 1998 - June 2015) the Emerging Markets returned over 525%. For us it's a reminder that markets ebb and flow, and neither good news nor bad news last forever.  And neither does the summer.  So we encourage you to spend the remaining days soaking up the sunshine and lingering over your favorite beverage with your friends and family. The ups and downs of the capital markets will be there when you get back in September. Enjoy the last days of summer.
Strategic Discussions Lunch: September 24, 2015
Turning Duress into an Investment Strategy Strategic Discussions Logo
Presenters  
Daryl L. Deke
Principal & CEO
New Market Wealth Management
 
Erik Knutzen, CFA, CAIA 
Managing Director & Multi-Asset Class CIO
Neuberger Berman
 
Agustin "Gus" Araya, CFA 
Founding Partner
Cordillera Investment Partners

Invitations to our latest Strategic Discussions event will be mailing soon! Mark your calendar to join us for an intelligent discussion of today's events, and the investment opportunities they are creating.  

Market Update
Though stocks ended last week modestly higher, volatility in the equity markets persists. The broad S&P 500 index was up 14 points from the prior week's close marking the fifth time in a row the index has reversed course over its previous week.  
 
Equity Index Returns
Source: Yahoo! Finance
Economic Commentary
> Consumer Discretionary Sector: Expectations for the back to school shopping season are low, but several consumer spending tailwinds suggest the sector may be poised to outperform.

Relative performance of consumer discretionary has shown inverse correlation to oil prices, and oil prices continue to decline. Lower prices at the pump should continue to provide support for consumer discretionary spending.

Consumer Discretion and Oil Prices

Consumers are benefiting from low interest rates and debt reduction efforts since the end of the financial crisis. The graph below shows that the financial obligation ratio for households (ratio of financial obligations to disposable personal income) is near 30-year lows.

Consumers' Debt Obligation

Finally, the consumer discretionary sector is on track to produce among the best earnings growth of all equity sectors during the second quarter of 2015 (12%, second only to financials at 21%). The biggest
drivers of the strong earnings performance were autos (lower gas prices), internet and catalog retail (shift to online spending), and household durables (recent strength in housing market).

 
New Market Wealth Management is dedicated to providing thoughtful research-based investment advice and forward thinking services. Combined, the Partners have over 70 years in the investment management business, providing advice to some of the wealthiest families and largest corporations, endowments and foundations in America.
695 Town Center Drive, Suite 540, Costa Mesa, CA 92626 (657) 900-1899
newmarketwealth.com