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The selloff across equity markets continued last week, as July’s BLS jobs data showed a slowdown in hiring and a rise in the unemployment rate from 4.1% to 4.3%. The losses across stock markets have benefitted bonds, as we have seen a steep decline in yields. The feeling that the economy is weakening, along with the upcoming likelihood of rate cuts, has led to a big rally in treasury bonds. While some of the recent data is concerning, we are hesitant to place too much emphasis on it. There are many forces at play, and it is far from a foregone conclusion that the economy is weakening such that stocks face a greater risk. While perhaps acting too slowly, the Fed has ample room to ease policy in the coming months. Additionally, we believe that at least some of the increase in the unemployment rate can be attributed to a rise in the labor force rather than outright firing by companies. Markets were bound to face some volatility, and with investors perhaps too complacent, it has hit. We continue to see an economy that faces many cross currents, and while some weakness exists, we should not forget that just a few weeks ago we had a stronger-than-expected Q2 GDP figure. Investing in stocks is not always easy, and this episode is a reminder of the value of a diversified, risk-focused approach.  Index Descriptions:
The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the USA. The Russell 2000 Index is a stock market index that tracks roughly 2000 US small companies, and is considered a key benchmark for US small cap stocks. The MSCI EAFE Index is a stock market index that measures the performance of large- and mid-cap companies across 21 Developed Markets countries around the world. Canada and the USA are not included. EAFE is an acronym that stands for Europe, Australasia, and the Far East. The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries. The Bloomberg US Aggregate Bond Index, or the Agg, is a broad based, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the USA. Accounts managed by StraightLine follow materially different investment strategies from the composition and performance of indices referenced herein and are not managed to mirror a specific index. Unless indicated otherwise, indices are unmanaged, cannot be invested into directly, are inclusive of reinvested dividends, and do not include the deduction of transaction, custodial or investment management fees that would further reduce actual performance if included. Indices are the property of their respective owners, all rights reserved. Periods greater than one year are annualized. Disclosures: Information presented is for informational purposes only. StraightLine Group, LLC (“StraightLine”) is a registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Past performance is not indicative of future results. Investing involves risk, including the possibility of loss of principal. The ideas and opinions expressed herein do not constitute legal, tax, or investment advice or a recommendation of any particular security or strategy. Before making any investment decision, you should seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory and foreign currency requirements for any investment according to the laws of your home country and place of residence. Any forward-looking statements or forecasts are based on assumptions and actual results may vary. Information presented from third parties is believed to be reliable, but no warranty is provided. StraightLine is not required to update information presented, unless otherwise required by applicable law. For more information about StraightLine, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov/firm/ summary/127401 or contact us at 248-269-8366. Comments are closed.
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