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Investors once more reversed course in June, turning to the buy side after a brutal downturn in May which saw stock indices drop about 6%. The reason for the reversal and return to a bullish outlook and increasing risk profiles once again came from very dovish central banker comments that fueled a belief that interest rates would be once again heading lower, reversing the increases of the prior two years. Outgoing ECB Chief, Mario Draghi came out with much more accommodative comments that mirrored the early January ‘pivot’ by U.S. Fed chief Jay Powell, which lead to the booming stock market of the first quarter. Then the June Federal Reserve meeting ended with a much more ‘accommodative’ view on the future movement of interest rates, justifying the 75% consensus market view that there will be an interest rate cut in July and another two cuts over the next twelve months. Investors are also expecting some degree of resolution in the U.S./China trade was, where increased tariffs have disrupted global supply chains and dampened expansionary plans. The economy saw some short-term benefits from these trade conflicts in the first quarter as companies built up inventories before the tariffs were fully enacted, but we expect that those gains will all be given up when second quarter numbers are released. (more…)