The economic news added further confirmation to our view of solid growth in the US economy. Manufacturing’s rebound is strengthening, the services sector is very solid, and the jobs market is much stronger than expected, reporting a third month of substantial job growth in May. However, instead of celebrating this good news, the financial markets chose a negative interpretation. That view sees higher inflation from oil and a stronger economy as raising the likelihood that the Fed must actually “raise rates”, instead of cutting them. That sent US and foreign financial markets into a steep selloff, in particular the high-flying AI trade stocks. Overseas, business activity surveys reported strong growth in key Emerging Market countries and marginal contraction in key....... (click for more)

Continuing enthusiasm for the Artificial Intelligence (AI) trade coupled with a steady stream of solid economic news, helped financial markets to mostly look past the Iran War. Positive comments from President Trump and Treasury Secretary Bessent in the final week of the month regarding progress in the Iran War negotiations, further helped markets look past the War. Overseas, China and Brazil reported positive upgrades in business activity with Japan showing improvement in consumer spending. The S&P 500 ended the month up 5.15% with Foreign Developed at 3.07% and Emerging Markets at 9.69%, the latter reflecting the rally in chip stocks related to the AI trade.  In the US, Large Caps outperformed Small Caps, while Growth outperformed Value, both of which were.... (click for more)