Global equities extended their 2019 gains into the second quarter but with increased volatility. Trade tensions — re-ignited by the threat of tariffs on essentially all US imports from China and potential tariffs on Mexico (as a means to force Mexico to take action to halt Central American migrants from crossing into Mexico on their way to the US) — created uncertainty and concern. Equity markets abruptly changed course in May on short-term developments by selling off but then rallying in June on signs of reduced tension.
The Federal Reserve’s actions continue to be closely monitored by investors as another catalyst for increased volatility. There appear to be signs of mild economic slow-down that could be intensified if the trade situation escalates. Positive notes include solid corporate profits, a stable interest rate environment (possible Fed easing), and low inflation. Stout Bowman will continue to take a cautious approach with portfolio diversification as we navigate the longest bull market in U.S. history.