Investment Commentary- Good Riddance to the Month of May!!
Most of the investing community, having expected a deal between the US and China to end their trade dispute, are sorely disappointed to this point. Not only has a deal not surfaced, but the trade tensions and rhetoric have escalated. This in turn has resulted a significant market correction. More to the point, any firms with direct exposure to China has been in the cross hairs of the selling. Global growth is slowing once again and investors have lost their appetite for risk. Geopolitical concerns dominate the headlines and we wonder with all the negativity are we talking ourselves into a recession.
Yet for all the negativity, these issues feel tactical and transitory. The President’s re-election is predicated on the economy, and the economy, will be influenced by the stock market and consumer sentiment. So, to the degree the Executive Office controls the narrative, the narrative could change with a tweet. Any resolution to the trade issues will likely spark a dramatic market rally.
Fundamentally, underlying secular business trends are very positive. Changes are afoot in many areas and the pace of change may be accelerating. We anticipate the storm clouds will depart shortly and when they do, we anticipate a quick powerful market rebound. In the meantime, good riddance to the month of May.