The S&P 500 rose an impressive 3.72% in July, supported by strong economic and earnings growth as well as a slight lessening in trade tensions. Via Nova’s outlook remains positive, but near term, the dog days of summer may weigh on stocks particularly in a mid-term election year.
We believe the facts of a healthy economy and strong earnings growth justify a bias in favor of equities and away from bonds. However, less accommodative central bank policies and the potential for a trade war are tangible threats to an otherwise positive outlook. Caution, not fear, is warranted.