A positive month for small caps with the ATY unaudited NAV rising by 2.6% and the FTSE Small Cap, Fledgling and AIM All- share indices improving by 2.9%, 3.4% and 3.1% respectively.

Notwithstanding the optimistic data on US employment published at the beginning of June, I wonder whether the global economy is running out of steam especially as the slowdown in China appears to be much more marked than the official statistics suggest. Electricity consumption has turned negative and rail freight stats. have been falling at nearly 10%. It was inevitable that China’s investment bubble would lead to a vast inventory of unsold property: the country produced more cement between 2011 and 2013 that did America in the whole of the 20th century. China accounted for 85% of world economic growth in 2012, 54% in 2013, 30% in 2014 and probably 24% this year. Japan’s exports to China have fallen by 15% over the past year and Russia, Brazil, Argentina and Venezuela are all contracting sharply. Europe is running up an extraordinary current account balance of $358bn but seems incapable of contributing much to global demand. As for markets, valuations seem rather stretched, bond yields are rising, Greece and Ukraine continue to worry and US interest rates are likely to rise in H2 although, to be fair, by only 25 basis points.

In short, there seem to be very few reasons why equities should go up in H2 although there is still value to be found in small caps by a diligent searcher.