May Newsletter Highlights

  • US Equity markets have continued to lead the global stock markets with an impressive run through the month of April. The majority of US companies beat analyst estimates in the most recent quarter, providing a tailwind to further appreciation.
  • The current P/E ratio on US equities is 17.7, which ranks at 71% of historical observations.
  • US GDP surprised to the upside as well, coming in this quarter at 3.2% growth, versus estimates at 2.0%.
  • The bond market and the equity market are showing different outlooks currently. The bond market would tell you the Fed remains relatively tight on monetary policy and that can hinder future growth. As evidence of that, the interest rate spread between the 2 year and 10 year treasury bonds is only 20 basis points, while the short end of the curve is currently inverted.