The Federal Open Market Committee (FOMC) met this week and voted unanimously to hold rates steady for the seventh consecutive meeting, leaving its policy range at 5.25 percent to 5.5 percent. This decision was widely anticipated, with futures markets pricing in a near-zero percent chance of a rate cut in the days and weeks leading up to the meeting.

Markets rallied in May, with U.S. stocks up mid-single digits for the month. This was an encouraging rebound following the declines we saw in April, and both the S&P 500 and Nasdaq Composite rose to new record highs during the month. International markets were also positive in May, with developed and emerging markets ending the month with gains. Even fixed income did well, as falling interest rates supported bond prices in May.

When a Cinderella story comes out of nowhere to win a championship, fans are ecstatic (just like I was watching Tom Brady win his first Super Bowl against the heavily favored Rams). But once teams have experienced success, the bar will continue to rise—and teams must also rise to meet the next challenge.

With nearly half the world’s population set to face national elections this year, including here in the U.S., it’s a time of questioning for many. People want to know who their next leader will be, how changing policies may affect them, what the economic implications will be, and what place their country or region will have in the world.

In our team meetings, we often discuss the shifting sands of the market. Not only is it an interesting topic, but it poses a challenge for asset allocators. We are in the midst of a multi-year outperformance cycle for large-cap growth. The companies that have driven this outperformance have all become household names: Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, Nvidia, and Tesla. The top 10 names in the S&P 500 account for roughly 32 percent of the index compared to the average since 1990 of 20 percent. During the dot-com boom, the top 10 weightings peaked at 25 percent.

Markets pulled back in April, as high inflation and rising interest rates led to mid-single-digit declines for stocks during the month.

This result marked the first monthly decline for U.S. equities this year following a strong first quarter. International markets came in mixed, as developed markets were down in April while emerging markets saw a modest gain. Fixed income was also down for the month.

The Federal Open Market Committee (FOMC) met this week and voted unanimously to hold rates steady for the sixth consecutive meeting, leaving its policy range at 5.25 percent to 5.5 percent. Futures markets had this expectation confidently priced in since mid-February, so the official decision comes as no surprise. This view is in stark contrast to market expectations at the start of 2024, when a second rate cut was fully priced in for this point in time. Yet even the first rate cut still eludes us.

Almost two years ago exactly, I wrote the piece “Global Inflation Outlook: Are Lower Numbers on the Horizon?” Global inflation peaked at 14.3 percent that same month (April 2022). Initially, inflation sharply came off this top, hitting a low of 2.1 percent in May 2023. But more recently, we saw prints above 5 percent globally on a headline basis before returning to the 3 percent range by year-end.

One of my core beliefs as a portfolio manager is that we get paid to worry so investors don’t have to. Several weeks ago, Brad wrote about what was worrying investors and whether those issues were worth worrying about. He also acknowledged that there are some real concerns out there as well. I want to build on that idea and provide insight into how portfolio managers think about risks when everything seems to be going exactly as investors had hoped and, except for some short pullbacks measured in hours or days, markets continue to move higher.

Living in New England, the weather can be inconsistent—so I never really trust that warm days could be here to stay until the second week of April. Watching the Masters this Thursday and seeing the beautifully manicured greens and blooming azaleas will get me excited for golf season (even if the grass isn’t as green up here and the weather is still in the 40s). But along with the start of spring and golf season, we also get ready to kick off the earnings season.