As hard as it may be to believe, we are past the halfway mark for 2Q 2017. If upon hearing that, you’re asking yourself “where does the time go?” we’re right there with you as we eye the Memorial Day holiday weekend that is quickly approaching.
As we shared in last week’s Monday Morning Kickoff, the current quarter has taken on a far different tone from how 2016 came to a close and 2017 kicked off. Even though the tech-heavy Nasdaq Composite Index has powered higher thus far in 2Q 2017, both the S&P 500 and Dow Jones Industrial Average have gained and lost ground in recent weeks.
As we see it, the last several weeks have been a combination of frenetic earnings activity, a flow of economic data that could be described as being at best “mixed”, and a “risk-on” “risk-off” vibe in the market. The schizophrenic risk profile of the market is increasing due to the impeachment fueled headlines from the Washington news cycle that is once again pushing out timing expectations for Team Trump’s reforms and stimulative plans. We’ve also seen the continued creative destruction impact that our Connected Society investing theme is having on brick & mortar retail.
All told, the entire combination has taken its toll on the market, bringing volatility back into the equation and likely led to a growing number of investors to question growth prospects for the economy and earnings. We were right there alongside that group as we saw the stock market have its worst day in several months last week, only to shake it off as DC-led concerns subsided. As we headed into the weekend, we learned that former FBI Director James Comey is expected to testify before the Senate Intelligence committee after Memorial Day, so expect the headline circus to come back to town before too long.
In the meantime, Trump is looking to get his agenda back on track and the weekend’s news that Saudi Arabia’s sovereign wealth fund had committed $20 billion to a new investment fund aimed at infrastructure projects, primarily in the United States. Alongside that announcement, General Electric (GE) said it had agreements for $15 billion worth of projects, and as part of $110 billion in arms deals aided by the Trump administration, Lockheed Martin (LMT) announced several deals, including a $6 billion commitment to building 150 Black Hawk helicopters in Saudi Arabia.
