August Commentary

Global equities were broadly positive in the month of July. In the US, the S&P 500 and Nasdaq both reached fresh highs during the month, continuing the strong momentum seen since stocks began to rebound from their Liberation Day tariff-related drop on April 2. The One Big Beautiful Bill Act was signed into law on July 4, and the month closed with President Donald Trump issuing an executive order that placed tariffs on nearly 70 countries. The market had a notable lack of volatility in July (the VIX reached a 5-month low), though with the new tariffs and signs of weakness in the labor market, the calm may not last.

Bitcoin reached a new all-time high during the month and gold remained in reach of recent record highs. The broader commodity markets including energy, metals, and soft commodities were more mixed.

The month closed with the Federal Open Market Committee choosing to leave rates unchanged. That was widely expected. What was more notable was that, for the first time since 1993, two Fed governors dissented on an interest-rate decision at the same policy meeting. That could foreshadow a more heated debate over easing monetary policy in the months ahead.

Signs of market froth abound, including the aforementioned lack of investor fear, the resurgence of meme-stock investing, and generally high valuations for most stocks. This in itself isn’t a reason to take cover. In fact, stocks have historically outperformed in the short term following sharp increases in speculative trading. What’s more, we continue to find overlooked and attractive companies that are trading for reasonable valuations. But we are emphasizing quality and being careful to avoid pockets of the market where expectations have likely gotten ahead of themselves.