April 2015 Commentary

In mid-April, markets began to discount shifts in two key variables that drive investment performance: inflation vs. deflation and the relative prospects for growth in Europe vs. the US. In any short period of time, perception is reality, and that was certainly the case with stocks and currencies during the second half of April. The winners of Q1 2015 suddenly became the losers during the last half of the month. German stocks, the US dollar, and 'defensive' equities suffered sizeable declines, while Brazilian, Russian and basic material equities were examples of losers that became winners. These developments beg two questions to be addressed in this monthly commentary. Is this asset rotation fundamentally sustainable or merely a trade? And second, as we've now entered May, typically a tough month for stocks, will 2015 be a year to 'go away in May'?...

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Emma Querengesser