Model Portfolios | October Update

S&P 500 4288.05 :: 10-Year UST Yield 4.57% :: September 30, 2023

We are now three-quarters of the way through 2023. We will get the advance estimate of third quarter real GDP growth in late October. The latest Atlanta Fed GDPNow estimate is for third quarter growth of 4.9% and the New York Fed Staff Nowcast is 2.1%. This follows real GDP growth of 2.1% in the second quarter and 2.2% in the first quarter. We expect the pace of growth to slow in the fourth quarter of 2023.

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This month we will review our real-time economic indicators.

The Association of American Railroads (AAR) reported US railroads saw total combined rail traffic -4.5% through the first 38 weeks of 2023 compared to last year. The combined traffic rail figure includes cumulative carload volume up +0.2% and intermodal units down -8.5%. In the most recent week of reporting, seven of ten carload commodity groups posted an increase compared to the same week last year.

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The American Trucking Associations’ Truck Tonnage Index increased 0.2% in August following a 1.1% increase in July. It appears the index bottomed in the spring and is now trending higher. According to ATA, “freight continues to be mixed, with consumer spending and factory output flat to down.” On a year-over-year basis the index fell 2.3%, the sixth consecutive year-over-year decline. Trucking is an excellent barometer of economic activity, representing more than 70% of U.S. goods transported.

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The American Staffing Association (ASA) Staffing Index shows that staffing trends are holding steady, although they remain about 5% lower than they were a year ago when labor markets were exceptionally strong.

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The recent stock market correction has helped reset investor sentiment. The National Association of Active Investment Managers (NAAIM) Exposure Index is back near the low end of its year-to-date range. Similarly, the American Association of Individual Investors (AAII) Investor Sentiment Survey shows that bearish investors outnumber bullish investors in the most recent week ending late September. Since we view investor sentiment as a contrary indicator, we welcome the increase in bearish investor sentiment and positioning.

The S&P 500 is +19.6% over the most recent twelve months ending September 30th. August and September were challenging as the S&P 500 saw returns of -1.77% in August and -4.87% in September. Similar weakness occurred last year with the S&P 500 losing -4.24% in August 2022 and -9.34% in September 2022, setting up a strong fourth-quarter recovery. Below is the monthly update of the Marketimer Model Portfolios and the Brinker Fixed Income Advisor Model Portfolios through September 30, 2023. This month’s update includes the model portfolio changes we published in early September.