The market is enjoying another solid session as gains trigger more urgency and fence-sitters ponder the reality they may have missed another golden entry point as the train leaves the station. Although crude breaking through $50.00 is a big deal, energy trails the move in financials, industrials and materials.
You should be overweight in industrials and materials, the true building blocks of the economy.
Trump Hits the Road
“Travel and change of place impart new vigor to the mind.” – Seneca
President Trump sets out for his first foreign trip, and in typical fashion, it promises to be huge. Five countries in nine days, including the birthplace of the world’s three largest religions. First stop is Saudi Arabia, which is strategically important on several fronts, including militarily and economically.
While headlines are focused on a $100 billion arms deal that has the potential to become $350 billion over the next decade, the real play is how American companies can assist the Middle Kingdom in its quest to lessen its reliance on oil.
Right now crude oil is the life blood:
Watching the UAE transform into a business and tourist destination has awakened Saudi Arabia to the notion it can, and should be, part of their mission as well. In fact, the UAE is the only trading partner in the Middle East we do more business with than the Saudis (our 19th largest trading partner).
Last year, America enjoyed a $1.1 billion trade surplus with Saudi Arabia down from a $38.0 billion deficit in 2012.
The biggest winners of the $18.0 billion in US exports to Saudi Arabia:
Beyond the sectors that are already doing brisk business in Saudi Arabia, look for greater demand for earth-moving equipment and other parts of the construction food chain from iron and steel to cement and concrete.
After over 27 years of being in downtown Manhattan, our office is moving across the river to Jersey City. Our email and phone numbers will remain the same.
Have a great weekend.
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