Here is a basic recap of what transpired:
- The second quarter was a tale of two halves in the U.S., with mixed performance to go along with the mixed economic data.
- Financial markets reacted strongly in mid May after the Federal Reserve announced that its asset purchase program could soon wind down.
- All areas of the global fixed-income markets declined as real yields spiked.
- Global equity performance was mixed, with U.S. stocks outpacing most other regions.
- In the U.S., small caps led large caps.
- Emerging markets, encompassing both debt and equity, were laggards on rising treasury yields and uncertain growth in China.
- Concerns about moderating emerging market growth also pressured commodities.
- Interest rates are rising because growth prospects appear to be improving.
- The U.S. economy continues on a slow but steady expansionary path.
- Japan's economy is showing some signs of life while Europe may be starting to stabilize. However, despite its stabilization, Europe still has a way to go before pulling itself out of its slow-growth recessionary funk.
- Inflation remains subdued despite the extraordinary expansion of the monetary base.
- Emerging market economies are struggling as trade with China and Europe slows and commodity prices fall. Sliding currencies and weak bond and stock markets are creating opportunities for emerging market investors.
***Link to Video Commentary***
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