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Commentary

Q3 2019 Market Outlook

The resiliency of the US equity market again was evident in the second quarter of 2019.  The trade concerns of May faded quickly and the market rallied as the Federal Reserve and the European Central Bank both indicated easier monetary policy may be forthcoming.  For the three-month period ended June 30th, the US stock market rose over 4% and has now entirely recovered all of the fourth quarter 2018 drawdown.  The S&P 500 now sits near all-time highs.  And it wasn’t just the stock market.  US bonds also posted extraordinary gains too, confounding the interest rate normalization crowd.  The US 10-year note yields approximately 2% currently, down 50bps in the last 6 months.  The total return of the Bloomberg Barclays Aggregate Bond Index exceeds 6% for the year, which is quite remarkable.  However, not all investors participated in this recent rally as virtually all other asset classes underperformed US large cap stocks and US fixed income, some by a material amount.  This recent rally has truly been highly focused between US Large Cap and Fixed Income.
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The Federal Reserve: What Me Worry?

December 2018 | David Cleary, CFA Insights
So, it’s safe to say, the market was very disappointed by the Fed’s 25 basis points tightening yesterday as well as the guidance provided for future hikes in 2019.  Reading the FOMC minutes from November and listening to Fed Chairmen Powell’s remarks at his speech at the Economic Club of New York a few weeks ago, where he said, “We will be paying close attention to what incoming economic and financial data are telling us” many market participants were led to believe that the Fed’s next actions would be more dovish.  That did not prove to be the case.
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Elections, Policy, Trade and Markets

November 2018 | David Cleary, CFA Insights
Now that mid-term elections are behind us, economic and investment decision makers can get back to business.  We will know soon how much of the October swoon was related to interest rate fears and how much was election related.  Given the market’s strong initial reaction to the election, it looks like the risk of an unexpected election outcome was indeed weighing on investor concerns. 
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History Doesn't Always Repeat Itself but Sometimes it Rhymes

October 2018 | David Cleary, CFA Insights
Way back in the spring of 2013, then Federal Reserve Chairman Ben Bernanke announced that the Fed bond buying program would come to an end. A global bond market panic ensued, interest rates moved sharply higher and ALL investment asset classes fell. There was no place to hide - stocks, bonds, commodities, real estate etc. were all marked down sharply over a one-month period. . .
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