August 2022 Monthly Review

Jordi Visser

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August began with continued enthusiasm for risk assets until the 16th, when the SPX peaked and began a sharp fall. This fall accelerated after Fed Chairman Powell’s Jackson Hole speech where he continued to emphasize that bringing down inflation was the Fed’s primary objective. In August, the SPX closed down -4.24% and the Russell 2000 Small Cap Index finished down -2.18%. The hawkish rhetoric from the Fed moved 10-year and 2-year rates up over 50 bps each. This led to weakness in credit with both HY and IG down for the month. Oil continued its down trend, moving lower for the 3rd month in a row, and gas at the pump continued its decline with a fall of 38 cents.

At a factor level, surprisingly, there were some positive signs as beta outperformed quality for the second month in a row. Normally, when stocks fall sharply, there is a rotation away from beta and into quality, so this marks a positive divergence to watch for in September. In addition, pure growth relative to pure value outperformed for the third month in a row. This pair had fallen sharply through May on the back of inflation and rate hike fears. This is another positive divergence.

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Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.

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