Performance at that the half year mark - nothing expected

We have lived through uncertainty, a war, trade battles, and various events that should have pushed markets lower; yet, we are at the highs in the core US market indices. This does not feel expected or normal.

One of my favorite exercises is to play out scenarios - what would you have expected to happen if a particular event occurred, and then examine the reality. No one would have expected the current outcome. This sharpens your intuition and also tests expected relationships.

We are now in a place where US stock indices are touching all-time highs, with breadth widening beyond the large-cap tech sector. The markets have looked through uncertainty. Some of that uncertainty has been resolved, but that does not alter the underlying view that we are in an environment with a wide range of views. Of course, investors focus on downside uncertainty. There is also upside uncertainty, or a positive reaction to the unexpected.

There is still a rotation effect toward international stocks; however, this bias toward the US is closing. High bet stocks and momentum have been the key drivers. In general, all the worst-case scenarios have proven false. The overheated rhetoric has subsided, and the world seems calmer. The doom reporting of the last six months may not be realized.