Downgraded U.S. Debt
What is it?
“US stocks plunged Wednesday after rating agency Fitch downgraded the US government’s credit rating, citing fiscal and political instability.”*
Why does it matter?
Both the equity and bond markets felt the impact initially. We moved away from long term treasury ETFs and added to some bond ETFs that could appreciate more in this environment. However, the stock market has held up well so we are not selling much as of now.
Blitz Index Update
What is it?
Each month we review any changes to the Blitz Index. The tool helps us understand where different aspects of the economy and the market are at. From there we are able to position portfolios for what may come next in the broader markets.
Why does it matter?
The Blitz Index score remains unchanged from last month. It suggests to be 50% invested in the stock market at a score of 4/10. Currently consumer debt and past stock performance are contributing to the investment level. On the other hand, the Fed and current interest rates added zero points to the score. Those aspects are keeping us cautious since they impact the consumer debt and stock market performance to some degree. We are adding to undervalued positions this week with small adjustments to our current portfolios. That may change if markets become more volatile.
Other articles we found interesting this week:
Stocks jump, rebounding from rough start to August
‘Rare’ rally in cyclical stocks largely over
Gasoline Prices Are Rising, Again
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 7/31/2023.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
Click here for more details about our investment management
Sources:
*Brett LoGiurato and Josh Schafer. “Stocks plunge as credit downgrade rattles Wall Street”. Yahoo Finance. 8/2/2023. https://finance.yahoo.com/news/stocks-plunge-as-credit-downgrade-rattles-wall-street-stock-market-news-today-200232129.html
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