A June Overview
The markets have rallied to a new high, coming off of a 7% decline in the month of May. Broadly speaking, we are seeing the continued trade tensions as the driving factor for much of our recent market volatility. Additionally, there is raised awareness towards the possibility of the Federal Reserve decreasing interest rates at some point in the future.
Over the last weekend in June, world leaders will meet in Osaka, Japan for the annual G20 (Group of Twenty) conference. The US – China trade war is expected to dominate discussions, though there will also be a private meeting between Japan’s Prime Minister, Shinzo Abe and President Trump to discuss the pending US—Japan trade agreement. In North American trade, the USMCA trade agreement was recently ratified by Mexico, leaving the US and Canada as the remaining unsigned parties.
The biggest question we had coming into the New Year was “will the weakness in the global economies drag the US down, or will the US stabilize the rest of the world with our economic strength?” For now, the latter theory has won out, thankfully. That said, the weakness in Europe and the lack of a deal between the US and China still poses a global economic threat. So, we are watching these themes unfold with a close eye.
In the short-term, we expect the renewed volatility to continue to whip-saw investors. But, if the strength in the US continues, we believe the final quarters of 2019 could continue a good year in the capital markets.