The S&P 500 index gained 5.5 percent in July, adding to the second quarter rebound of 19.9 percent despite the fact that Gross Domestic Product (GDP) fell at an annualized pace of 32.9 percent in the second quarter. This stark contrast between the underlying economy and the markets is due to the seismic shift in Federal Reserve policy.
The Eurozone economy contracted by 12.1 percent in the second quarter, which ultimately led to the European Union approving a $2.06 trillion spending package. The German economy, Europe’s largest, fell by more than ten percent in the second quarter.
China’s GDP reportedly rose at an unlikely 3.2 percent from a year ago following the 6.8 percent decline year-over-year in the first quarter. We say “reportedly” as a good portion of the global economy was shut down in the second quarter, making that number suspect.