In our last commentary, we shared our view on the current state of the market. Since that time, not much has changed. After a volatile February, the market has found its footing, basically trading flat over the past few months. Individual stock volatility remains high, although the larger averages continue to be skewed by a few large technology stocks. We believe a disciplined approach to valuation is extremely important in this market and will continue to take profits when we feel current prices offer little upside.
The political rhetoric out of Washington continues. The current issue of note is the trade and tariff battle being waged by the administration. Although not enjoyable to watch, the outcome of this strategy is yet to be known. We expect increased volatility as this situation plays out on the world stage. We will continue to monitor the situation and make changes as necessary.
Interest rates continue to be the topic of the day. As we expected, the Federal Reserve increased short-term rates again in June. Additionally, they signaled more increases in the future. With short-term rates rising faster than long-term rates, this has resulted in a “flattening” of the yield curve and something we are watching closely. We still believe investing in short-term fixed income is the prudent move at this time. This will allow us to reinvest at higher rates should the opportunity present itself while capturing the benefits of short rates in the meantime.
Many companies will report earnings over the next few weeks. This will allow us to analyze how individual companies are performing in relation to the trade data that has been in the news recently and its impact on their businesses.
We are always happy to answer any questions you may have. Never hesitate to contact us.