Coming into the week the S&P 500 had YTD returns of 7.04% while the MSCI EAFE had YTD returns of -1.51%. The Vanguard Total Stock Market ETF (ticker: VT) has a YTD return of 2.01%

• The third estimate of US GDP growth showed expansion of an annual rate of 1.1% in 1Q, this is an upward revision to the previous estimate. June and May data supports the assumption that 2Q growth should be around 2.5% helped by consumers.

• The weak job report in May appears to have been an aberration as June saw the economy add 287,000 jobs. The unemployment rate rose mostly due to an increase in the participation rate.

• The early reports are showing strong 2Q year-over-year EPS growth for companies.

• Core prices increased in June by 0.2% and core PPI increased 1.3% year-over-year. If these inflation trends continue inflation will likely hit the Fed’s 2.0% target before yearend.

• The Fed held the Federal funds rate target range of 0.25% – 0.50% in the June meeting citing concerns related to volatility and Brexit uncertainty.

Early in 2016 and most recently after the Brexit vote the markets were shaken with downward volatility. In each case markets eventually rebounded from the overreactions. Generally speaking the environment seems to be that of low but steady growth, skeptical sentiment, and low probability for US or global recession. The market drivers lead me to remain bullish and continue to expect more all-time highs in the short-term.

– Wyatt Swartz

– 7/20/2016