Do you get the feeling that you have entered the twilight zone this week? Events certainly appear to point toward that – beginning with unprecedented wide spread tariffs that threaten to destabilize US and other countries, followed by a customer being refused service at a diner in Virginia, kids stranded in the border without parents, congresswoman encouraging people to publicly confront and harass people in places like restaurants, department stores and gas stations and culminating with supreme court swing judge resigning ahead of mid-term elections. The only not so surprising events in this past week was another shooting in America, North Korea executing another general in front of a firing squad and Amazon picking another industry to destroy.

One could say this has been the order of the day for the past quarter, at  least in Wall Street. Almost every asset class and sector saw steep swings over the past three months, as investors reacted to a shifting investment landscape that seemed to change by the day. Despite that, all the major indices ended in the green for the quarter, but year to date, the Dow is down 1.8% and S&P 500 is up a meager 1.7%. Only the Nasdaq and the Russell 2000 indices seem to be enjoying the roller coaster ride, both posting better than 7% return year to date. Given this uncertain backdrop, what  can investors expect in the second half of 2018?

Future Wealth’s View

With trade wars brewing and the midterm election looming, it is almost a given that the stock market could see plenty of bumps in the second half. Despite strong fundamentals in the economy, Q2 earnings season, that begins late July, will likely set the stage for another choppy quarter. Companies are simply at a loss to figure out if these tariffs are for real or is Trump simply enticing other countries to call his bluff before he backs down and goes back to watching Fox News.

Which means many companies will likely play it conservatively and guide for a weaker than expected Q3 in the Q2 earnings calls except for maybe Tesla, whose CEO – Elon Musk always makes the wildest predictions for production and delivery of its Model 3 only to fall way short, even in good times. Of course, if and when the trade tensions die down, there will likely be another crisis from the White House that will shake markets once again. What is clear is that Trump-era politics is a surreal nightmare we can’t wake up from.

If you thought getting out of this twilight zone was going to be easy, think again. But sit tight, this ride is going to get rougher and will take awhile.