In this month's episode of the Market Observatory, Sam and I break down the latest market and economic news, including:

As July gave way to August, an eventful news week moved markets. Corporate earnings continued to surprise to the upside. They are now showing roughly 10 percent year-over-year growth versus expectations of 4.9 percent at the start of the quarter. The first look at Q2 GDP growth came in at 3 percent, which also exceeded the consensus estimates of 2.5 percent. As an offset to this upbeat news, tariffs continue to be seen in the daily headlines. Further, July’s jobs report came in below consensus, with large downward revisions to previous months. 

The market rally continued in July, as strong corporate earnings growth and optimism on trade lifted stocks. The S&P 500, Dow Jones, and Nasdaq were all up low single digits for the month. The story was mixed internationally, with developed international stocks down while emerging markets rallied for the third straight month. Turning to the economy, the news was broadly positive. The economy grew at an annualized rate of 3 percent in the second quarter, beating expectations and signaling a healthy economic backdrop.

"We thought we had all the answers, it was the questions we had wrong."
— U2

In the latest episode of the Market Observatory, Sam and I take on some big questions:

I spent my summers in a small Maine town where my mother grew up. In July and August, I was surrounded by relatives, playing whiffle ball and swimming. On the fourth of July, we would gather on my uncle’s lawn and watch the fireworks over the lake. As we reached the grand finale, we all waited for my aunt in the back to say, “Hooray for George Washington!” This has become part of our family’s fabric, passed on to the next generation. I treasure those memories and look forward to making new ones in the coming days. But before we all embark on our Independence Day holiday, let’s take a moment to reflect on what’s happening in the markets and what awaits us on the road ahead. 

Markets continued to rally in June, capping off a solid quarter for investors. The S&P 500, Dow, and Nasdaq were up for the month and the quarter, supported by the continued cooling of trade war rhetoric. The story was similar internationally, as a solid June contributed to a positive quarter for both developed and emerging market stocks. On the economic front, updates released in June were broadly positive. The May jobs report showed continued solid hiring during the month, and consumer sentiment surged to a four-month high.

As we enter the second half of the year, what can investors expect for the economy and markets? That's the big question we set out to answer in this special Midyear Outlook edition of the Market Observatory. This month, Sam and I are excited to welcome Brad McMillan, chief investment officer, as our special guest.

The first half of the year has left investors with many questions about the path ahead for the economy and markets. Unfortunately, there haven’t been many concrete answers. Tariff announcements and trade negotiations have commanded the room. Then there is the budget bill, which includes tax and spending cuts. It’s also being negotiated at a time when concerns about the country’s deficit have grown, given Moody’s downgrade of the U.S. government’s credit rating. Last but certainly not least, the Fed has yet to lower rates this year.

"I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." — James Carville