We hope you and your families are doing well and that you are enjoying the warmer weather and looking forward to a fun-filled summer.

Last year was one of the calmest years we have seen in the markets in many years with volatility being nearly nonexistent. This is well outside normal behavior for markets, but as we entered 2018 the pendulum swung the opposite direction where we saw a large number of market swings in both directions. The volatility we have witnessed this year can be attributed to a broad number of concerns ranging from fears of a more aggressive Fed to the protection of user data in social media platforms. Most recently, tariff concerns have heated up again and could remain at heightened levels before agreements between the U.S. and China are reached.

When compared to last year, the volatility in the markets has resulted in lackluster performance so far in 2018. This weakness has fueled fears that the economic expansion may be coming to an end and there is little room for markets to continue their upward trend.

We see few signs that suggest that the current cycle is coming to an end in either the US or around the world and therefore believe recession concerns are a bit premature. The tightening labor market and rising inflation levels are likely to put pressure on the Federal Reserve to continue increasing interest rates this year. However, the Fed has been clear that it will raise rates gradually, and current policy does not appear close to the level that would jeopardize the economic expansion.

We expect the environment for corporate earnings will remain positive. The pace of earnings growth may slow from incredibly strong levels reached in the first quarter, but we expect results will continue to be robust. This should continue to bolster US equity returns for the near term.

Fixed income performance has been broadly lower this year with much of the trading driven by Federal Reserve policy. The Fed raised interest rates at its March meeting but kept them unchanged in May. It is expected the Fed hikes rates at least
twice more in 2018.

Overall, we remain positive on US and international equities. We continue to hold fixed income as it provides diversification and ballast to the portfolios. Our expectation for this year is muted relative to the last couple of years but still clearly in optimistic territory.

On another note, we would like to congratulate Glen Clemans for another outstanding ranking in Baron’s Top Advisor list. Glen was ranked number 4 in Oregon for 2018 and has been in the top 10 of Baron’s Oregon rankings since 2012.

Thank you for the trust you place in us and as always we are here for you whenever you need us.