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2019 Mid-Year Update

Global growth slowed over the last six months. In April, the International Monetary Fund (IMF) forecast for world Real Gross Domestic Product (GDP) growth in 2019 of 3.3 percent was down 0.3 percent from 20181. Some slowdown in the U.S. was expected as benefits of tax-driven fiscal policy diminished; however, slumping exports and lower investment in emerging market economies contributed to the slowdown as well.

Since GDP data is reported with a lag, and often subject to revisions, we monitor global Purchasing Managers Index (PMI) data, revealing additional weakness in business activity across the globe. Given the modest, but expansionary level of business activity through June, we expect corporate earnings results and management guidance to play a more prevalent role in the  second half of the year.

In response, the Federal Reserve and other central banks ended gradual and anticipated tightening of monetary policy. Central banks reiterated stand ready to deploy accommodative policy to support slowing growth.

Our resulting capital market updates are not material enough to warrant a rebalance, however, we recommend caution and would advise against investors attempting to reach for risk given potential for slower growth, full valuations and macroeconomic uncertainty.

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