Weekly Review, August 14, 2023
Home Depot beats expectations, Trump indicted plus more ahead:
International exposure has been a major detriment for performance over almost any time period. We have been underweighting international for some time, but check your 401(k) because target date funds typically have a very healthy amount of international exposure. You may be able to recreate the same level of stock/bond exposure using other funds than the target date funds that have better long term performance
Home Depot tops expectations but we would guess is likely sandbagging guidance. With mortgage rates topping 7%, and most folks locked into 2-3% mortgages, we would expect an increase in remodels, renovations and upgrades, all of which benefits $HD and $LOW.
After Ackman's big short on long-dated treasuries, coupled with the US debt ratings downgrade, investors fled long-term treasuries causing long-term rates to rise. Given equities tend to have a significant amount of their cashflow in the distant future, rising rates in long-term bonds can present a headwind to equity markets.
Trump gets his 4th indictment this week. Take a look at the ways this indictment over election interference in Georgia is different from the others.
China continues to face a number of economic headwinds and is making policy moves to shore up the economy. It will be interesting to see whether this "cold" will spread to the rest of the world economies or whether it can be contained within China.