U.S. politics has been delivering more twists and turns lately than even the most melodramatic arc on The West Wing. And yet, diversified investors have come through the chaotic headlines mostly intact.

Harry Truman once asked to be sent a one-armed economist, frustrated with the profession’s propensity to condition every assessment with “on the one hand this… while on the other hand that…”.

While equity investors have not yet seen downward GDP revisions as a reason to turn cautious (likely because they also brighten hopes for rate cuts), corporate credit spreads are now several months removed from their 2-year lows. We are becoming concerned that High Yield credit, in particular, may be on the “Highway to the Danger Zone”.

For the first time in over twelve months, U.S. GDP forecasts for 2024 have been trimmed, and with these cuts the “new dawn” has faded for continued growth acceleration in the U.S.

We continue our unofficial summer series looking at the “left behind” portions of the global equity market (we began with a look at small caps and then international stocks) with a look at Value and its dismal relative performance versus the S&P 500 and Growth stocks.

John Mayer’s “Waiting on the World to Change” is an apt soundtrack for international investors who have experienced a decade and a half of underperformance versus the U.S. markets and are waiting for signs of a turn in performance.

There may be only one duo that is more at odds than 1977 Stevie Nicks and Lindsay Buckingham, and that is the Payroll and Household Surveys for employment in the U.S.

Like the quarrelsome rock n’ roll couple, these two measures of U.S. labor data “went their own way” in the jobs reading for May.

This week we are providing our assessment of the U.S. small and mid-cap equity market, a universe of nearly 2,500 listed companies that are generally classified as having market capitalizations from $50M to $30B and have traditionally represented about 20% of the total U.S. equity market cap.

As U.S. large cap indices “crossed the frame” of prior highs to trade near or to new all-time-highs, it is helpful to take an assessment of the tailwinds and headwinds for equity returns from this point (instead of “casting quarters into wells that hold our dreams”).