Yahoo Finance

The S&P records a fourth winning month to cap a volatile August. Yahoo Finance’s Jared Blikre joins us here with the trading day takeaways. Jared, bullet point number one.

All right. Bullet point number one is August is a wrap. I mean, we knew that. Um, but let’s go to some of the sector action. And interestingly, I mean, it’s easy to forget how bad the month was when we began. I calculated this. This isn’t on sectors, this is the S&P 500. But at that August 5th low, we were tracking the worst August since 2011 in the SP 500. At the month end, it’s the best August since 2021. So that’s a difference. And then measured from the August 5th low, it is the best August since 1984. So I’m going to show you something here. We did this a week earlier in the week, and I’m going to update it. This is uh the month to date sectors, Staples number one, Real Estate number two, Healthcare number three, Utilities number four. Those are all defensive sectors. Uh, but you measure this over 19 days, which is from the 85 low, suddenly you got cyclicals in there like financials, you got growth. That’s tech number two, also up 11%. Consumer discretionary, uh, and then industrial. So really, things kind of turned around, and it’s been a pretty growthy month so far.

And the good news is, if you’re long in the market, it’s September.

Uh, except that, oh, here we come. September is fraught with.

That’s not true. Okay.

Yeah. So let me, we’ve been going over some of this stuff, and let me just show you some of the charts that I’ve been showing. This is uh the first 10 and the last 10 days of the month, and this big spike here, you want that, well, that’s in July. So that’s in the rearview mirror. This little one down here, that was the second half of July, then the first half of August, second half of August. All those were positive. Now we’re facing September. First 10 days, not so bad, but the last 10 days, uh a little bit worse, at least on average. Doesn’t have to happen this way. Here’s another look. This is VIX seasonality. The purple line is what has happened this year. The cyan is what usually happens. And you’ll note that what usually happens is we get the highest peak of the year right in October. So we are entering that time of year when we tend to have some VIX spikes. And I would mention too, in August, at the beginning, that 8/5 spike, that was a big one. Usually we see echoes. So we might expect to see something like this. It doesn’t have to be as high, but even something, this got to 65, you get something in the 40s, that’s going to be another big downturn in stocks, if it happens.

What about the data, Jared? Aren’t we data dependent?

Yeah. Well, I’ll tell you, you know, the powers going to be looking at data, so we don’t know what September is going to bring. The data could turn around, but let’s review where we are. With inflation, inflation has met the Fed’s objective. The Fed believes inflation is conquered for the time being. Then you take a look at the labor market, the Sahm rule, the Claudia Sahm rule, recession indicator, just triggered. Uh, BVA was out with a really compelling analysis today on the private payrolls, how they have just been not contributing as much to the overall picture, and when we are at the current levels, well, that tends to mean we’re in recession. So we’re getting a lot of bad data, and then we’re also heading into this bad time of year on average.

All right. We’ll see what happens. Number three.

There you go. So we got this baby bull in commodities. And uh, let me show you a really interesting chart. This is from Bank of America. This goes back to 1955, and the purple line is the 10-year rolling uh return on commodities. So you take an index, and this is when it’s higher. These are almost 20% returns that we were seeing in the inflationary 1970s. And in fact, this whole box here was an inflationary time. And then this whole box here, from about 2006, 2007, all the way into the pandemic, that was a deflationary time. What I want people to notice is right now, we are just getting on the positive side of these 10-year rolling returns, and we are entering a potentially, potentially secular inflationary period where we’re just probably going to see these higher rates of inflation. Doesn’t have to happen that way, but my point is, we could be in for a repeat of this earlier area in the late 60s and the 1970s and the early 1980s. So we’ll have to see what comes of that.

Quickly, as you look across the, you know, the universe of commodities, what should investors be concentrating on?

Uh, I am looking at gold in particular. That is at record highs. We haven’t even seen retail participation, so I think there’s a lot of juice in the can for gold. I’m looking at WTI crude oil, $70 to $90, and I’m also watching coffee here. I was just pointing out, we got a 10-year chart. This is a big cup that we have on this coffee chart. So a cup of coffee means higher, higher prices for Brian Sozzi.

Jared, thank you, buddy. Appreciate it.