Weekly Commentary

Stocks continued their strong bull run this week, in spite of a pullback on Friday.  Tech earnings continued to show strength, with chip makers leading the way yet again.  This week also was highlighted by the Trump-Xi summit in China, which was light on details, but with a possible takeaway that the Taiwan situation could be a point of contention in the future.

Another source of volatility has been the bond market.  Treasury rates have broken through their previous trading range, with the benchmark 10-year hitting 4.60% on Friday, as higher oil prices have spooked investors on inflation as well as the Fed's ability to lower rates for the foreseeable future.  We would recommend heightened caution regarding duration, especially given the technical analysis of a broken resistance level of 4.50% on the high end of the range.  We reiterate our cautious stance on fixed income in general, given the negative news combo of higher inflation expectations, looser fiscal restraint, and less monetary policy support.

Finally, buying the dip continues to reap benefits, and we would continue to see a strategy of buying on weakness to be constructive, especially given the strong momentum and earnings tailwinds that are likely to remain intact over the upcoming weeks.  Emerging market equities could also be an interesting tactical play after the Friday selloff, as positive business cycle characteristics, as well as attractive valuations, all point to supportive buying opportunities on "down days"

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