Global equity markets surprised investors in a positive away, with the MSCI ACWI Index posting a 13% return in the first half of the year. 1 In the US, the NASDAQ 100 posted its highest ever first-half return of 39%. 2 After a difficult 2022, expectations of a recession put investors on the backfoot for 2023, but the economy remained resilient and equity markets recovered. Now, recession fears linger and hawkish monetary policy by major central banks casts doubt on performance in the second half of the year.

The US stock market keeps pushing higher despite recessionary warnings. S&P 500 Index earnings for the most recent quarter are estimated to have risen, albeit at a slower pace than stock prices. As a result, valuations rose, with the P/E estimated at 24.43. 1 On the other hand, U.S. Treasury bond yields reached levels not seen in more than 10 years following the current Fed’s rate hike campaign. This comeback of the bonds challenges the former environment of TINA (there is no alternative – to stocks) to mutate to TARA (there are reasonable alternatives).

The S&P 500® Index entered a bull market just last Thursday. It seems that neither the gloomy economic sentiment nor the Fed’s rate hike campaign can slow the bull’s rage, as the market is currently more than 20% above the lows of last October. Once again, some people are starting to call this the most hated Bull Market rally. Realistically, this is just another case of investor’s myopic behavior, as most previous rallies have been deemed “hated” at some point.