- As markets shifted into a sell-off mode, net outflows from long-term mutual funds have intensified. In the week ended June 26, $11.6 billion was withdrawn from mutual funds, the fifth consecutive weekly decline. Counting the prior week, nearly $14 billion in outflows were registered collectively.
- Equities suffered the most, with total outflows for the two weeks ending June 26 amounting to around $22 billion. Domestic equities were the biggest decliners, seeing more than $10 billion in outflows, with large-capitalization companies making up half of the drop.
- Bonds, meanwhile, saw positive inflows of around $10 billion, with taxable and investment-grade paper particularly in demand.
- At the G20 summit last month, China and the U.S. agreed to restart trade talks, with President Trump saying he would not impose additional levies on Chinese goods and allow U.S. companies to sell equipment to Huawei.
- Chief oil-producing countries, united under OPEC, and Russia agreed to extend oil output cuts into 2020 as demand has disappointed.
- Readings of the Purchasing Managers Index (PMI) from a string European nations came in better than expected, with France showing signs of optimism in both the manufacturing and services sectors and Germany picking up some slack. Of note, Germany’s manufacturing PMI remains deep in contraction territory at 45.4 for the sixth consecutive month – a stretch of weak reports not seen since 2013.
- U.S. durable goods orders fell for the second consecutive month in June by 1.3%, although the more important core orders rose 0.3%, beating expectations of 0.1%.
- Chinese manufacturing PMI dropped in the contraction territory to 49.4 compared with 50.2 in the prior month, a sign that the trade war has started to bite.
- The U.S. economy unexpectedly added 224,000 jobs in June, comfortably beating expectations of 162,000. The strong report comes after a thoroughly disappointing one in May. The unemployment rate ticked up to 3.7% from 3.6%, while hourly average earnings rose 0.2% compared with 0.3% expected by analysts.
Check out our previous edition of the scorecard here.
- Technology shares were again among the best performers these past two weeks, although they were slightly beaten by the broad market.
- Vanguard’s total stock market index fund (VTSMX) advanced 1.49%, a little higher than *Shelton’s technology sector fund” (NASDX), which gained 1.48%.
- Vanguard’s total bond market index fund (VBMFX) is again the worst performer with a rise of just 0.28%.
- Sectors were all up, with two exceptions.
- Financials sector fund (VFAIX) added 3.46% in the past two weeks, as banks rebounded from a sell-off in prior weeks due to fears of falling interest rates.
- The energy sector fund (VGELX), meanwhile, lost 0.68%, despite a deal between OPEC and Russia to keep a lid on oil supply into 2020.
Major Asset Classes
- In asset classes, managed futures fund (EVONX) rebounded these past two weeks, gaining more than 2% and becoming the top performer.
- Short-duration bond fund (LALDX) lost 0.24%, as a strong jobs report in the U.S. diminished bets that the Federal Reserve will cut interest rates soon.
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The Bottom Line
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