Stocks were down modestly in a relatively quiet week – until a string of events all occurred simultaneously in what the media dubbed “Super Thursday.” Former FBI chief James Comey testified in a Senate hearing, the UK held its snap election, and the ECB held its latest rate policy meeting. Domestic stocks remained slightly down for the week, while the surprise UK election results drove a deeper selloff in international equities on Friday, as well as the British pound.

Weekly Returns:
S&P 500: 2,432 (-0.3%)
FTSE All-World ex-US: (-1.1%)
US 10 Year Treasury Yield: 2.20% (+0.05%)
Gold: $1,267 (-0.9%)
EUR/USD: $1.120 (-0.7%)

Major Events:

• Monday – Multiple Middle Eastern nations severed diplomatic ties and transport links to Qatar, claiming the nation shelters and finances extremist organizations, including the Islamic State
• Monday – Apple kicked off its developer’s conference, and unveiled a smart speaker called HomePod to better compete with Amazon and Google
• Tuesday – Uber fired more than 20 people as a result of its ongoing harassment investigation
• Thursday – In his Senate testimony, former FBI chief James Comey stated he felt “directed” by the president to end the investigation into Mike Flynn
• Thursday – Prime Minister Theresa May and her Conservative Party suffered a surprising defeat in the UK election, losing majority control in Parliament
• Thursday – At its most recent policy meeting, the ECB left interest rates unchanged
• Friday – Shares of major technology firms sold off in tandem, sharply reversing their strong year-to-date rally

Our take:
Leading up to “Super Thursday,” former FBI chief James Comey overshadowed almost every major headline from around the world. But despite all the buildup, it’s still unclear how his testimony will impact the president, if at all. The president is now on the counterattack, claiming Comey leaked private information. I’m sure we’ll be hearing much more on this topic in coming days and weeks.

The second big event on Thursday came out of the UK, where Prime Minister Theresa May’s decision to call an early election backfired, leaving her short of the 326 seats required for a majority in Parliament. In order to stay in power, she is attempting to form a loose coalition with a small party from Northern Ireland. None of this is likely to end in a Brexit reversal, but it creates additional uncertainty around how exactly the UK will leave the EU.

Lastly on Thursday, and perhaps with the clearest impact on markets, was the ECB’s policy meeting, which left interest rates unchanged. This was pretty much in line with expectations, but a stronger growth outlook drove the central bank to remove language suggesting a bias toward future easing. It is true economic conditions are slowly improving, and just this week the European Union’s statistics agency revised its first quarter growth projections upwards. But very similar to the United States, inflation remains stubbornly benign and there has been minimal wage growth.

The silver lining? The central bank’s policy is likely to remain highly accommodative for the foreseeable future. That means no near-term tapering, which is ultimately what investors want to hear. This dovish stance has likely fueled some of the recent outperformance of international equities, and despite the rally, European valuations continue to look attractive on a relative basis.