The Bureau of Economic Analysis estimates that US gross domestic product (GDP) expanded by 1.4 percent in the second quarter, a pace which suggests that economic growth will need to accelerate significantly to meet the consensus expectations.
Meanwhile, the Federal Reserve Bank of Atlanta’s GDPNow model forecasts that the US economy expanded by 2 percent in the third quarter, down from the more than 3 percent projected in early August.
This lackluster economic growth makes the economy vulnerable to external shocks. Meanwhile, the S&P 500 continues to trade at elevated valuations, a divergence that makes us cautious on equities and has prompted us to add several hedges to the Wealth Builders Portfolio this year.
In addition to these defensive moves, we’ve also focused on building a Watch List of high-quality names that we would consider buying if the broader market suffers a correction or these stocks experience a temporary hiccup that doesn’t stem from deterioration in their underlying business. Staying on the Watch collects all these investment ideas and provides our latest thoughts on these names.