August was yet another strong month for equities as investors continued to rotate into the asset class from cash and fixed income. Despite the continued uncertainty from COVID-19 and a looming presidential election, a major policy announcement from the Federal Reserve opened the door for stocks to continue their run higher during the month. On August 27th, Fed Chair Jerome Powell announced a historic policy shift that would essentially allow inflation to run above 2% before the Fed raises interest rates. Historically, the Fed had sought to implement quantitative tightening before inflation hit 2% to prevent a runaway scenario. Yet with persistently low inflation over the past decade, it was time for a change. The overall message here is that interest rates will likely stay lower for longer and we believe this type of policy shift will further benefit equities. Despite the record-setting rally in stocks, we believe that markets may still be discounting the possibility of a Trump reelection in November. This is evidenced by the fact that in August 2016, Hillary Clinton had as much as a 7.6% advantage over Donald Trump in the general election polls. As of August 31, 2020, Joe Biden only had a 6.3% lead over Trump. Many things can happen in the next 60 days, but we believe a Trump reelection will potentially lead to further upside in equities. Going forward, we expect the momentum-driven rally in technology stocks to begin fading. In the near-term, we tend to favor U.S. value stocks and international equities relative to U.S. growth stocks. Additionally, we would like to see Congress approve additional fiscal stimulus measures sooner than later.