Another quarter is over.

Half the year is complete--markets continue to perform extremely well. Over the past twelve months, the S&P is up about 20%. Forward looking indicators of economic growth still look good. Inflation in the mid 2% is certainly not the end of the world but the trend is clearly higher which is the one factor quite worrisome to the Fed. Bernanke and Co. opted to keep rates unchanged this week--a move that makes perfect sense.
The markets have been very volatile lately--as evidenced by an increasing VIX. Markets can consolidate by going up and down for a period of time. Is this the pause that refreshes? or a short term top? International markets continue to turn in blockbuster returns. Keep a keen eye on those holdings--feels like a bubble could be brewing--particularly China where the retail brokerages resemble Off-Track-Betting establishments and everyone's grandmother views the market as a get rich quick vehicle. In comparison, domestic markets look cheap.
The mid-cap sector continues to steal the show with year-to-date performance in excess of 10%...the growth style in this sector is up about 13%. Small caps are up about 8% while large caps lag behind with about 6.5%. Interest rates are higher--the yield on the 10 year note is about 5.05% up from a low of about 4.6%--the bond market is still perturbed by players' exposure to syndicated sub prime loans. Bonds could also be signalling higher economic growth rates.
Thanks for reading.