In June, U.S. stocks posted their best performance of the year and their best June performance in decades. Early in the month, U.S. Federal Reserve Chair Jerome Powell hinted that the Fed is considering rate cuts in the face of stubborn inflation figures. This was by far the largest positive factor driving stocks during the month. Meanwhile, tensions with Iran flared up in June with the downing of a U.S. drone. Apart from a rise in oil prices and some minimal equity market volatility, this was effectively a nonevent. Tariffs were also a widely discussed topic in June. President Trump did not go through with tariffs he threated on Mexico, although this was likely a hollow threat from the beginning. The U.S. auto industry, among others, would be disproportionately hurt by any trade barriers with Mexico. Finally, the most significant trade-related development came from President Trump’s meeting with Chinese President Xi Jinping on June 29th. The much-anticipated meeting had no earth-shattering developments, other than a bilateral promise that no more tariffs would be levied while negotiations continue. As we have mentioned in the past, China has far more to lose in a trade war with the U.S. due to their economy’s overwhelming dependence on exports. Despite this fact, President Trump will likely push for a trade deal sooner than later with the looming presidential election cycle. While the trade deal that gets done may end up benefitting China more than the U.S., any semblance of a compromise will be positive for stocks.