The list of companies announcing better than expected earnings continues to expand. Facebook, Amgen, GoPro and a whole host of others set a constructive tone for investors. My expectations are that we continue to see our equity markets gain increasingly more modest ground as August come to a close.
The fact is that Q2 corporate earnings have continued to deliver solidly positive price action for US equities. US economic outlook has significantly improved over the past four weeks, as was outlined by the FOMC minutes, and increasingly geo-political themes that have acted to unfurl investor confidence have themselves receded.
Earnings will remain in the driver’s seat for the balance of the week/month. August trading begins on Monday. We can expect volume on US equity markets to take to traditional summer swoon in August but if recent history is any indication, we can also expect volatility to tick markedly higher. Last year China was the trigger for a global equity market meltdown.
A word of caution:
We have been on a post-Brexit tear for a month now. We are trading at lofty valuations and record highs with not so much as a pullback. We are vulnerable. Buy some cheap protection.