July stock markets took a dip at the end but still held on to some gains. Year-to-date stocks still hold double digit returns; one-year returns are again ahead of last August 1. Small and mid-sized company stocks, particularly value-oriented stocks, have not recovered from last year’s 4th quarter drop. Some sector stocks such as health care, utilities and REITs are strong over the past year. International stock indices are negative since last July.
Clearly, nothing moves the market like the Federal Reserve: not Brexit, tariffs, trade wars, Iran, North Korea, Russia compromising our democracy, the mounting national debt, you name it. The markets were prepared for the July 31 reduction in interest rates but anticipated a larger reduction or the forecast of a series of reductions, easing the flow of money with lower interest rates. Our current economy does not require lower rates and easier money; it is the rest of the world that is struggling. The stock market does not handle surprises or disappointment well. Fortunately the effect is temporary.
The yard was pretty much overrun with chipmunks this summer, their antics well beyond what we usually observed. After demolishing the pears for their seeds, they discovered that poppy pods also have seeds. They would climb the strong, bushy stems and gnaw off the pods. It seems that annual poppies are opium poppies. They could not stop until every pod was gone. Then a stranger, a sleek black cat appeared in the yard. The chipmunks scattered and within days disappeared. Paradise lost.
