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The headwind created by the trade and tariff issues formed a heightened level of uncertainty facing the economy and the market; however, the stock market, yet again, scaled the proverbial “wall of worry” over the first six months of this year. The June total return for the Dow Jones Industrial Average of 7.3% was the best June monthly return since 1938. Further, for the first half of 2019, the S&P 500 Index recorded its best six-month total return in twenty-two years increasing 18.5%. As of July 2019, the U.S. economic expansion that followed the Great Recession becomes the longest on record at 121 months. The second-longest expansion was from 1991 to 2001 with a length of 120 months. In our Summer 2019 Investor Letter, we discuss how some of today’s policy decisions are beginning to rhyme with the 1991 to 2001 period. One of those policy decisions centers around a likely Fed Funds interest rate reduction by the Fed at the end of July. What may seem unusual is the fact an interest rate reduction seems likely at a time where the stock market is near an all-time high and the economy continues to expand. This is discussed in more detail in the Investor Letter.

Economic data is suggesting a slowing global environment, but a recession seems further out than near. Furthermore, it appears the Federal Reserve will reduce rates by 25 basis points at its July meeting, if for no other reason than to provide an “insurance cut” to push out a potential recession.