A June Overview
The markets are continuing to trade in a volatile range, with no real direction in place. Performance-wise, the markets have been plus or minus a few percentage points the entire year. But, it “feels” more negative because of the volatility we have experienced since January. There are a few things that stand out to us in this time frame:
1. The economy continues to hold up very well. In fact, the Index of Leading Economic Indicators just came out in June and the index is continuing to hit new highs. Markets/economies rarely turn over when the leading side of the economy is still accelerating.
2. The talk of a global trade war continues. We believe most of the volatility we have experienced in the last five months can be directly attributed to the talk of retaliation between countries. That said, we think the chances of a full-blown trade war are very low.
3. Interest rates continue to rise. Our current unemployment rate stands at 3.8% and we are beginning to see wage pressures. These are the two main drivers to the FED and this leads us to believe that rates will continue to press higher for the foreseeable future.
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