Q2 was quiet, and it ended with a whimper. U.S. stocks finished up 3% for the quarter but down slightly for the week. International stocks were up slightly for the week and outpaced the United States for a second consecutive quarter (+5.7%), driven largely by dollar weakness. Financials had a strong week, led by banks following successful Fed stress tests. Passing the tests allows major financial institutions to increase dividends and join the share buyback party.

Weekly Returns:
S&P 500: 2,423 (-0.6%)
FTSE All-World ex-US: (+0.1%)
US 10 Year Treasury Yield: 2.30% (+0.16%)
Gold: $1,241 (-1.2%)
USD/EUR: $1.143 (+2.1%)

Major Events:

• Tuesday – Apollo Global Management raised $23.5 billion for a private-equity buyout fund. It was the most ever for such a vehicle, indicative of the increasing role of private equity funds
• Tuesday – Google was assessed a $2.7 billion fine by the EU for allegedly favoring its own comparison shopping sites in search results
• Tuesday – A federal judge said the DOJ’s antitrust lawsuit against Qualcomm can proceed
• Tuesday – Private equity firm Sycamore Partners agreed to buy Staples for $6.9 billion
• Wednesday – ECB president, Mario Draghi, made comments suggesting stimulus measures would start to be scaled back soon, but there was confusion over his intent
• Thursday – Walgreens and Rite-Aid scrapped their merger plans due to antitrust concerns. Walgreens will buy about half of Rite-Aid’s stores, but Rite Aid stock declined 25%
• Thursday – Meal-kit delivery service Blue Apron IPO’d at a valuation of roughly $2 billion, which was about $1 billion less than was expected before Amazon bought Whole Foods

Our take
Overseas attitudes toward dominant U.S. tech companies could be an increasingly important and contentious issue in the coming years. This week’s $2.7 billion European Union fine against Google represents less than half of one percent of parent company Alphabet’s market valuation, but the issue is much broader and helps explain part of why the stock was down almost 6% this week.

Here in the United States, there is increasing grumbling about the power concentrated in a few companies – specifically Google, Amazon, Facebook, Apple and Microsoft. The recent Amazon acquisition of Whole Foods raised the perception that soon there is going to be “just one retailer.” We think that is a big stretch, but there is no denying these companies play a huge role in many parts of our lives and that their dominant market share has made it very hard for competition to evolve.

One can imagine the sentiment if all of these companies were German or Japanese, so it is no surprise that overseas governments are taking a hard look at regulating U.S. tech companies. For investors, friendly oversight on a global level may be needed to justify current valuations. It will be a trend worth watching.