Investors successfully compartmentalized favorable US economic and earnings reports from a seemingly growing list of macro-risks, while a thaw in European Union (EU)/US trade talks provided hope that trade wars would not go global, producing a modest bounce in international equities.
June market action was very much a function of geography, with US markets little changed, but less benign results seen elsewhere depending on the proximity to increasing trade tensions. China and other emerging markets were at the epicenter. While giving the appearance that the US is “winning” the trade war, the strength in the dollar and US asset prices was primarily due to exceptionally strong second quarter growth. Commodities were a real wild card, depending on the mix of double-digit West Texas Intermediate oil gains or trade-war-inflicted losses in grains and industrial metals. While central bank actions were not unimportant, they were overshadowed by geopolitical developments.
In this issue:
“Are Modern Portfolio Theory and Diversification Dead?” by D. Fort Flowers, Jr., CFA
“Japan Trip Report” by Bruce L. Swanson, PhD
“The How and Why to Be a Great Beneficiary” by Ross W. Nager, CPA