Don’t look back in anger, I heard you say. Oasis
Summer is drawing to a close; we are now at the end of August. The S&P had its not uncustomary meltdown in the holiday season, only to recover much of those losses. Oasis announced that the brothers had patched up their differences and would play a series of concerts, and the scramble started for tickets. The last concert they played was in August 2009, so 15 years ago. The world was in a very different place then, as to what it is now. The global economy was continuing to recover from the deep recession caused by the financial crisis. We saw the bottom of the S&P 500 in April 2009, probably the best buying opportunity we will see in our lifetime.
Barack Obama became the 44th president of the United States; there was still fighting over the Gaza Strip. The Bitcoin network was created as the first block of digital currency mined by a person or group of people using the name Satoshi Nakamoto. Bernie Madoff was sentenced to 150 years in jail. Federer defeated all before him, and Manchester United won the Premier League again. Interest rates were cut to zero and would remain there for almost ten years. The concept of QE was introduced to prop up the US economy during that period.
Back to today: Nvidia, whose quarterly earnings were released this week. A company whose share price in 2009 was 43 cents, a company probably only a select few had heard of. Nvidia now accounts for 6% of the S&P 500, and its results are the talk of the town. The company announced results that showed revenue grew over 120% year over year, which is pretty impressive. However, stock markets look forward, not back, and the guidance fell modestly short of the lofty expectations analysts had baked in, and as a result, the shares sold off a bit. But in the context of its rise, it was a minor blot on the landscape.
The US economy remains buoyed by the ability of the US citizens to spend, as the Commerce Department upgraded its estimate of growth in the second quarter from 2.8% to 3%. Although there have been some downgrades in the payroll growth from the Bureau for Labour Statistics, the employment market remains robust. Will all this deter the Fed from cutting rates in September? I doubt it, but it will perhaps reduce the odds of a 50-basis point cut. The month of August has seen a continuing drop in the value of the US dollar. As a result, sterling has risen to above 1.32. Stocks look like they are finishing the month positively, unlike how they started August.