The stock market experienced further significant gains in the 2nd quarter and our relative performance was substantially better than the indexes. Many forecasters and market pundits have been taken by surprise by what appears to be a “Goldilocks” economy. Inflation has been coming down, therefore the Federal Reserve has Paused and the need for additional rate hikes has diminished materially.
We have a mixed economy; certain sectors are strong while others have weakened, leading to overall, a soft landing. We highlighted the housing sector in our last letter. Lately, the industrial sector has been a source of strength spurred on by the potential for infrastructure spending.
As we expected, quarterly earnings announcements have been better than expected, and certainly better than feared. The most important positive development has been a broadening of the stock market rally, which only three months ago had been dominated by a small handful of technology stocks. This development is healthy and should lead to a more sustained investment environment.
