Sell in May and go away, is a piece of investment advice sometimes heard. This year, make that January.
The Dow Jones Industrial Average
The S&P 500
To be sure, investors in the tech and entertainment stocks that dominate the Nasdaq Composite
Stuck in mid-winter, though, are some of the major sectors - transportation, industrial companies like General Electric (GE) and United Technologies (UTX) and banks - most of which are trading flat for the year so far. Those are companies that got a boost from the tax cuts and have helped to generate better-than-expected U.S. economic growth, yet investors aren't benefiting.
Marko Kolanovic, a strategist at J.P. Morgan, in a note published on Wednesday, has one explanation that seems plausible, considering the volatile nature of some of the reports that have been coming from Washington on trade issues.
"By attributing the trade-related news flow (positive or negative) to the performance of the U.S. market, we estimated the impact on U.S. equities to be negative 4.5%" since March, Kolanovic said in the note. "Taking the current market capitalization, this translates into $1.25 trillion of value destruction for U.S. companies. For a comparison, this is about two-thirds of the value of total fiscal stimulus."
In short, Kolanovic is saying that if President Trump hadn't decided to launch trade wars on U.S. allies including Canada and the European Union countries and major trade partners such as Mexico and Japan, investors would be holding stock that's worth $1.25 trillion more than it is.
Judging by the G7 this weekend, it looks like the relationship damage President Trump has decided to inflict on the other six major industrialized democracies won't be ameliorated anytime soon; in fact, it looks more likely that Trump will scrap NAFTA in favor of negotiating separate deals with Canada and Mexico.
Based on Justin's false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!— Donald J. Trump (@realDonaldTrump) June 9, 2018
PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, "US Tariffs were kind of insulting" and he "will not be pushed around." Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!— Donald J. Trump (@realDonaldTrump) June 9, 2018
On Saturday, the President skipped out of the G7 early so he can be on time for his tete-a-tete with the North Korean dictator in Singapore next week. Talk about punishing China for its theft of intellectual property has dissolved after Trump agreed to lift sanctions against Chinese telecommunications firm ZTE in return for a $1 billion fine. Trouble is, ZTE broke American law and has been accused of posing a national security threat.
Even complaints about China's steel-dumping have evaporated in the brouhaha over the steel and aluminum tariffs the U.S. is slapping on its most important trade partners.
So it's not very clear sailing heading into the summer, and the President seems determined to kick up more tempests as the season progresses. On the way to Canada he complained that Russia isn't in the G7 group anymore, having been kicked out for its invasion of Ukraine and annexation of Crimea.
Stock market investors can be forgiven for not being exactly sure which way is up. Sideways seems pretty good for now.