Stocks Continued to Rally in Q2, Mixed Signals Persist
Global equity investors enjoyed another quarter of strong performance as the S&P 500 Index rose 3.1% and the MSCI All Country World Index (ex US) gained 3.3%. Emerging markets led developed markets for the second consecutive quarter as the MSCI Emerging Markets Index jumped 6.6%. Year to date, these three indexes increased 9.3%, 8.7% and 14.8%, respectively, in their local currencies. When foreign-sourced returns are translated into depreciated US Dollars, however, the MSCI All Country World Index (ex US) and the MSCI Emerging Markets Index are up 14.1% and 18.4% year to date. Geographically diversified US investors should be pleased.
Drops in long term bond yields and oil prices during the quarter were concerning, however. It is unusual for a decline of such magnitude as we have seen in the price of oil since 2014 to be unaccompanied by recession (see chart), and lower bond yields sometimes presage economic downturns.Download Investment Letter >>>