May Meltdown

Monthly Market Snapshot: May 2019


After a strong start to the year, global stocks pulled back sharply in May as U.S. – China trade tensions once again started to escalate. Globally, stocks finished the month 6.2% lower (although it should be noted that even with the losses, global stocks are still up 8.0% year-to-date). In the United States, stocks experienced similarly-sized losses with the S&P 500 losing about 6.6% in the month. The areas most exposed to trade were the tech-heavy NASDAQ and emerging markets, which slipped 7.9% and 7.5%, respectively.

Thus far, financial markets have been far from panicked and have been experiencing a fairly orderly unwind. There remains an element of faith in the market that trade deals can be reached. However, the longer that trade tensions linger (or expand to Mexico and Europe), the higher the chance that investors’ faith (along with economic growth) starts to wane.

As a result, Citi’s Private Bank’s Global Investment Committee (GIC) has decided to move to an underweight on global stocks for the time-being. After the decision, the GIC’s global stock allocation is now 2.0% underweight, global fixed income is 1.5% overweight and cash is 0.5% overweight.