CIO Comment August 2023

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The US GDP results for Q2 23 were higher than expected with +2.4% vs. +1.8% projected, and the current earnings season is performing better than expected with almost 80% of US corporations topping actual profits. The Federal Reserve made a further 25 bps interest rate hike, which the forward curve had already factored in. All of this is accompanied by extremely low unemployment rates. The ADP gauge of US private payroll growth grew by 324,000, significantly more than the 190,000 projected but down from June's extremely robust 455,000. The latest US unemployment number fell from 3.6% to 3.5%.

 

We continue to be bullish on risky assets, but after five straight months of gains, a consolidation or perhaps a minor correction is now overdue. A continuation of the bullish trend would not be surprising given how many investors have missed out on this equity surge