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June 1, 2016
U.S equities advanced over the final two weeks of May, temporarily dispelling the myth, “sell in May and go away”. The S&P 500 Index increased +1.7%, while the Russell 2000 Index moved +2.2%. The S&P 500 Index now sits +3.3% YTD heading into June. The boost in U.S. equities coupled with positive macroeconomic data has reignited speculation of another rate hike by the Federal Reserve. The U.S. economy remains stable with solid retail sales, which were supported by auto sales, and improved industrial production data. Additionally, home sales and homebuilding are steadily improving. Thus far, the expectation of another raise in lending rates has not spooked investors. Since the early decline in January, and bottoming on February 11th, the S&P 500 Index has rallied over +14%.
International equities did not fare as well with the ACWI ex-U.S. -1.7% in May, bringing its YTD return to +0.5%. Many of the large economies abroad, including Japan, China, and some in Europe, continue to struggle with growth while their accommodative monetary policies are having mixed results.
Moving into June
We slightly increased exposure in our tactical strategies throughout May and enter June approximately 85% and 95% in our U.S. and international strategies respectively. With a strong economic backdrop and positive technical support, we expect continued growth in the near-term.