June was a very good month for the markets, and in fact allowed the S&P 500 average to hit an all-time high yesterday. The DOW gained +7.96%, the S&P gained 6.9%, and the NASDAQ marked a 9.47% increase. For the year to date, the DOW is positive at +16.25%, the S&P stands at +18.76%, and the NASDAQ is at +25.19%

We continue to see no factors, economically, which suggest the overall expansion is ending; it is slowing very slightly. Of note, industrial output is flattening but that is largely attributable to trade issues and ample inventories. GDP was positive in June and remains at an annualized +3.1% rate. Inflation remains muted at below the FED target of 2%; it is starting to slightly accelerate as tightness in the labor market is tending to push wages higher.

The conversations at the G20 meeting in Japan have gone far in assuaging the concerns of “trade wars”, and for the immediate future, trade worries should recede as a focal point for investor concerns. Consumer confidence, as well as business and consumer spending, remain positive. Jobs are still being created and corporate earnings are very strong. Rate changes in the next six months are possible but unlikely. The FED seems, nevertheless, committed to a cautious, data-driven policy process.

As we enter June, we feel that this will be a modestly positive month, with strength in the first two weeks and weakness thereafter. July, like recent months, will likely be choppy. The historic probabilities are 66% for the Dow to be positive, and 55% for the S&P; the NASDAQ probability is 55%, and the probability for the smaller capitalization Russell 2000 is 49%. We continue to see major political problems becoming less disruptive; there will, however, remain unsymmetrical cross-currents which will result in accentuated volatility during periods of market weakness.