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In May, stock indices were being pushed higher despite most of the component stocks trending downwards, because the overwhelmingly dominant size of the mega-caps allowed them to control the overall market direction.

Sean Hanlon, CEO and Co-Chief Investment Officer of Vestbridge Advisors, Inc. talks about and explains the financial environment from the 2023 Mid Year Update.

By Dr. George Calhoun – Hanlon Investment Management Advisory Board Member Executive Director of the Hanlon Financial Systems Center

The first half of 2023 has been marked by lopsided gains, with a handful of mega-cap tech companies accounting for nearly all of the S&P 500’s 16.9% year-to-date returns, through June 30th. In our 2023 beginning of the year Annual Outlook, we cautioned that despite near-unanimous calls for a first-half recession from major financial institutions, we saw potential for a scenario in which US GDP was able to maintain a slightly positive rate of growth thanks to record low unemployment.

Following the first quarter regional banking sector panic, interest rate expectations shifted towards a Federal Reserve (“the Fed”) pause, due to concerns that further rate hikes would only exacerbate the stress of interest rate mismatches between banks’ long-term investments and shorter-term interest payments on deposits.

“One flag, one land, one heart, one hand, one nation evermore!”
– Oliver Wendell Holmes –

The Fed paused on interest rate hikes last week.  At the post meeting press conference Chairman Powell mentioned housing services as a crucial aspect of the economy where the Fed needs to see progress on inflation.

“Struggle is a never-ending process. Freedom is never really won, you earn it and win it in every generation.”

– Coretta Scott King –

“My father gave me the greatest gift anyone could give another person:
He believed in me.”

– Jimmy Valvano –

“America was not built on fear. America was built on courage, on imagination and an unbeatable determination to do the job at hand.”

– Harry S. Truman –