August was almost like any month from the past, marked by sharp declines, surprising rebounds, and significant data releases that kept the capital markets buzzing as usual. Some good opportunities that were being tracked saw new capital allocations from dry powder.
Top Surprises
- Yen Carry Trade Unwinds: The yen carry trade, where investors borrow yen at low interest rates to invest in higher-yielding assets, sent shockwaves through global markets. As the yen strengthened, markets saw a significant selloff, leading to a 10% drop across various indices.
- Nikkei’s Worst Day Since 1987: In Japan, the Nikkei Index experienced its worst day in over three decades, reflecting the broader concerns in global markets and the specific pressures facing the Japanese economy.
- Downward Job Revisions: U.S. unemployment data added to the pessimism, as earlier estimates were revised down by a staggering 818,000 jobs, raising concerns about the actual strength of the labor market.
Some Positives
- Retail Sales Surpass Expectations: Despite the market turmoil, U.S. retail sales provided a bright spot, beating expectations with a 1% increase. This suggests consumer spending remains resilient, offering hope for continued economic growth.
- NVIDIA Shines: Tech giant NVIDIA ($NVDA) ended the month on a high note, reporting $30 billion in revenues, a testament to its dominance in the AI and semiconductor markets.
- CPI Below 3%: Inflation data also offered some relief, with the Consumer Price Index (CPI) coming in below 3% for the first time in years, signaling a potential easing of inflationary pressures.
How Did the Markets Fair
- Despite the turbulence, the major U.S. indices closed the month with gains, albeit with mixed performances:
2. S&P 500 ($SPY): Up 2.49%, showing resilience amid global volatility
3. Nasdaq ($QQQ): Up 1.46%, buoyed by strong tech earnings, particularly from NVIDIA.
4. Dow Jones ($DIA): Up 2.07%, benefiting from positive retail data and easing inflation.
5. Russell 2000 ($IWM): Down 1.33%, underperforming its larger-cap peers, reflecting ongoing challenges for smaller companies.
August was a month of contrasts. While global concerns and economic revisions weighed heavily on the markets, strong corporate earnings and positive economic data helped lift the major indices into positive territory
Disclaimer: Nothing here should be considered an investment advice. All investment carry risks, including possible loss of principal and fluctuation in value. Finomenon Investments LLC cannot guarantee future financial results.
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