Stock markets closed the month slightly positive. The US Dollar softened slightly. Both stocks and bonds are doing well at this time. By market sector, energy continues a down trend and biotech and financials were also down in May. All other sectors moved forward with the largest steps in utilities, information technology and consumer staples. Our average net-of-fees diversified portfolios returned competitively with the stock markets for the month and year-to-date.
Besides slowly raising interest rates, the Federal Reserve is looking at unwinding its bulging $4.5T balance sheet. It can do this by not replacing expiring mortgages that it bought from banks between 2009 and 2014 in Quantitative Easing. Market positive signals point to rising inflation and unwinding will work to control this. If it is done slowly the markets may drop a bit and recover quickly. If the economy continues to run hot, we can expect to see more upside market. A more reactionary Federal Reserve could cause the markets to drop significantly. The Fed actions will have more real impact on the markets than political scenarios and are the news to watch (if you can find it).
June blooms seem more profuse than ever this year. The bird feeders attract entertaining chipmunks and squirrels as well as birds. Bunnies like the garden as do the deer, who must browse by night as we never see them. Time on the deck is full of animation as well as serene space. Not a bad return on a hard work investment.
