July 2019 Commentary

Unlike the 19th century proverb which spoke to the weather entering March like a lion and exiting like a lamb, Fed Chair Jerome Powell's press conference last week ensured the reverse happened for the market's exit from July. Fueled by valuation multiples that have expanded more than 20% year to date & driven 95% of the upside in U.S. stocks, equities continued to grind higher during July on hopes that the Fed would complete its 180 degree turn from December's hawkish policy stance and announce its first interest rate cut in eleven years with guidance of several more to follow. Unfortunately, Chair Powell's history of difficulties in communicating policy intentions continued at his press conference on the last afternoon of July, causing the S&P 500 to have its first 1% down day since the last day of May. Predictably with Powell's more 'hawkish than expected' tone, the US dollar moved to two year highs, gold was clubbed and the yield curve bull flattened. But these price moves didn't even last a day.

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