By Henry Ma, Julex Capital Management
As the second quarter came to a close, U.S. equity markets continued to flirt with new record highs amidst a slew of positive economic data.
Most importantly, the U.S. Federal Reserve continues to support the economy and bond market with assurances that it will continue to provide a high degree of accommodation as warranted.
The weak final revised Q1 GDP of –2.9% was discounted by most analysts and investors due to the harsh weather. The economy is actually in good shape if you consider strong corporate earnings, modest inflation, jumps in pending home sales, and recovering employment stats. Potential geopolitical disturbances have mostly moved to the background.
Emerging markets led the world equity markets again in June with broad returns of 2.7%. U.S. and international developed markets produced solid returns of 2% and 1%, respectively.
Notably, the U.S. energy master limited partnerships (MLP) continue to outperform the general market with robust gains of 5% in June and 13% for Q2. Fixed income markets paused a bit with bonds mostly flat for the month, but producing gains of 2% for the quarter and 4% for year-to-date for the first half of 2014.
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