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Capital Markets Review and Commentary: April

Stocks have continued to trend upward in 2019. Major US indexes fully recaptured losses from Q4, moving on to hit new all-time highs. Meanwhile, international stocks remain well below their peak set last January, over a year ago. This leaves the global stock market (VT) up solidly in double digits this year, but a relatively modest 5% since the start of 2018.

April market highlights include:

Trade Deal With China

Progress on a trade deal with China was reported throughout the month, but significant uncertainty remains. This issue is likely to be the main driver of short-term volatility in the coming weeks. We believe the most likely outcome is for a resolution to be reached. However, if it is viewed as temporary, it is likely to be somewhat disappointing to markets. And if talks do fall apart and 25% tariffs are put in place for a meaningful period of time, it would create a much more significant hit to growth than what has been experienced so far.

Strong Corporate Earnings

Corporate earnings are exceeding expectations. S&P 500 Q1 reported earnings growth is trending toward a 1% decline, while expectations at the beginning of the quarter were for a roughly 4% decline.

Fed Keeps Temperate Tone Around Rate Hikes

The Fed indicated it will remain “patient” on rate hikes, disappointing some who were looking for hints of a rate cut.

High Profile IPOs

High profile IPOs continued, with Zoom and Pinterest successfully listing shares. Uber is expected to IPO this week. Some view the flurry of tech IPOs as a concern, but we note that supply impact and overall enthusiasm remains moderate compared to the extremes of 1999.

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