We have also begun to see a quiet trend forming of a few large corporations trimming down travel and consulting budgets. These areas are the first to get cut when there is a contraction in the economy, with the potential that this is an early sign of economic trouble.  The trend is not fully formed enough to indicate economic trouble ahead, but we will be watching it extremely closely in the coming summer months.

In a similar vein, Macy’s announced their worst quarterly sales since the recession.  It is not yet clear what this indicates – it could be a reduction in consumer confidence in response to Q1’s stock market volatility or simply the shift from physical retailers to online merchandisers.  Either way, it is another datapoint pointing to a troubled economic psyche.

Finally is the uncertainty around the presidential race. Plenty of ink has been used to describe the abhorrent policies of the presumptive Republican nominee, despite the lack of specificity that has characterized his proposals. While primary results show a Democratic victory in the general election (ignore the national polls released this week, they are grossly inaccurate this far away from the election), there is still a chance that Trump could be president. Should that happen, the agenda he has outlined would lead to near certain economic decay for the U.S., of unknown duration.

Given this signaling towards an economic contraction, we remain light on equities and heavy on cash and fixed income to take full advantage of their inherent stability.  For equities that we do hold, we have companies that will continue to expand their cash flow despite variable economic conditions.

It is a more uncertain time than most in recent memory. Awareness, transparency, and thoughtful discussion are vital to managing through this period.

David