June Commentary

The old Wall Street adage of “Sell in May and Go Away” rung hollow last month, as the S&P saw its best May returns in over 30 years[1]. Equity markets continued their push higher in May as the market began to shrug off April’s trade-related macroeconomic uncertainties.  The main catalyst came in the second week of the month, when the White House announced an agreement with China to reduce tariffs on both sides and set out a plan for further reductions. The S&P 500’s 3.3% move higher that day accounted for more than 50% of the index’s ~6.3% advance for the month. Additionally, and as expected, the Fed held its target federal funds rate steady at 4.25%-4.5%. It wasn’t all smooth sailing though, as the Treasury saw somewhat soft demand for a $16bn sale of 20-year bonds shortly after Moody’s became the third and final major rating agency to cut the U.S.’s credit rating from the highest level, leading to some modest volatility in the market.

Despite the strong month, the caveat we offered in May’s market brief remains, as uncertainty remains the key theme in the global economy. Consumer sentiment has stabilized at relatively dour levels, though the “hard data” in the economy continues to fare much better on a relative basis. Global trade and its impacts on businesses will continue to determine where the economy and markets go from here, and we at SAM believe those without a crystal ball (us included) are likely best served by preparing for a range of outcomes rather than betting on specific scenarios. With that in mind, we remain confident in our belief that owning productive assets, in particular high-quality businesses that can actually gain share in times of exogenous volatility, will continue to be the right strategy. If you have any questions about your portfolio or would like talk to a member of our team for how to position your portfolio, schedule some time HERE.