July 2023 Monthly Review

Jordi Visser

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The first half of 2023 was dominated by continued inflation worries along with recession fears that intensified into hard-landing calls after SVB.  July seemed to be an important month for investors and strategists throwing in the towel on these fears, or at least talking about them as an issue for next year.  Economic data, particularly employment, remains strong while inflation released during the month surprised on the weaker side.  Mike Wilson at Morgan Stanley, who had correctly forecasted last year’s weakness, admitted he remained bearish for too long while still expecting more weakness to come.  GS reported that investors were forced to cover shorts, leading to one of the largest de-grossing months in recent years.  The SPX was up for the 5th month in a row to close out July up near 20% YTD.  An important signal was a broadening out in the market after the first half of 2023 dominated by technology and narrow breadth.  The Russell 2000 Small Cap Index was up 6% for the month, its second consecutive month of 6+% gains.  The size factor was down for the second month in a row.  Beta continued to work with pure volatility posting its 3rd month in a row with at least 1% gains.  The three-month rate of change was the highest since 2020.  Pure beta outperformed pure profitability for the 3rd month in a row.  Commodities had a strong month and the yield curve steepened.  All of this shows investors needed to change their positioning that was preparing for a recession.

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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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