Review & Outlook
Second Quarter 2019
July 5, 2019
John Augustine, CFA, Chief Investment Officer
Still Searching for a Soft Landing
The second quarter of 2019 featured noticeable movements on geopolitical, trade, economic, central bank, and market fronts. These kept us with a "balanced and diversified" approach to portfolio management.
The headlines were fast-moving and numerous:
- Tensions between Iran and the U.S. continue to rise. While this does not have economic impacts at this point, markets do move on the headlines.
- Trade wars picked up pace in the quarter, with new headlines with Mexico, India, European Union, and China. As of this writing, though, we are in a cease-fire period.
- U.S., and global, economic numbers softened around trade, manufacturing. and business investment. This weakening has been noticeable, especially in Europe, with central banks ready to act if needed in the third quarter.
- At their May meeting, the Fed pivoted its thoughts of raising their Fed Funds. Rate to now likely cutting that rate at the July or September meeting
- All major markets did see gains in the second quarter, but at a much more measured pace than the first quarter. Domestic stocks and bonds had about the same total returns in the period.
Our stock and bond teams continue to focus on higher quality securities, as we will now be going into what is expected to be a flat earnings season for publicly traded American companies. Our economic team is parsing the reports for signs of the soft landing that we believe will occur, potentially in the third quarter if the trade truce noted above holds.
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