Our view of the market is to trust but verify.

We are hopeful that the economy can continue to expand, but cautious in our market outlook.

Global growth is at risk and international indicators have slowed, but the domestic economy remains healthy. Employment growth, real wages, and consumer spending continue to improve, despite slowing growth in capital expenditures by businesses.

There are a few bright spots in emerging markets such as Russia, Greece, and the Shenzhen markets. Elsewhere in the world, global trade continues to be a drag on growth. There are signs of recession in Germany, and Latin America struggles with weak oil prices. Slow international growth will strengthen the US dollar, even as markets anticipate easing from the US.

Populist politics are a wild card. Brexit in the UK, far-right and left parties, elsewhere, and chaos in Italy add to the confusion. Political pressure on the Fed, however, is normal. After Chairman Powell failed to commit to more rate cuts, the Administration put pressure on the Fed by ramping up trade pressures. Lower interest rates would stimulate some sectors, but the US will likely remain a high-yield nation.

There were two hawkish dissents from Federal Reserve Presidents at the last FOMC meeting indicating some diversity of opinion. Market conditions are not clear at the moment; the market expects (and needs) lower rates. In The Intelligent Investor, Benjamin Graham writes: “In the short run the market is a voting machine, but in the long run it is a weighing machine.” What counts right now is to weigh the long term fundamentals and try to look past the short term market votes – both up and down!