With a sizzling earnings season wrapped up, investor focus in May shifted to a myriad of geopolitical issues. An overall theme was change and inconsistency. With China, threats of tariffs and trade war oscillated with glimmers of compromise and agreement. Late in the month, traditional US allies were pulled into the conversation as it became more likely that aluminum and steel levies would apply broadly.

The fortitude of the Euro returned to focus when populist parties captured Italian elections. Upon initially failing to form a government, Italian bonds plummeted. However, they partially recovered when an agreement was reached and the new ruling parties downplayed any threat of Italy leaving the Eurozone.

The US withdrew from the Iran nuclear deal while a planned summit with North Korean leader Kim Jong Un was on again, off again. At month's-end, it was scheduled for June 12 in Singapore. While an important development for the world, capital markets largely lost interest in North Korea during 2017. This is logical as the country has almost no impact on the global economy. Europe, on the other hand, is critical. Any renewed signs of debt crisis or threat to the Euro have strong potential to rattle markets.

Quietly, S&P 500 companies posted an eye-popping 26% earnings growth in Q1, according to Thomson Reuters. US Unemployment dropped to 3.8%, the lowest since 2000. Wage gains were modest, which keeps the Fed on track for incremental and well-spaced rate hikes. The result was a strengthening dollar and higher US stock prices. Tech stocks regained leadership as scrutiny over Facebook and Amazon faded. Driven largely by currency impact, international stocks declined in May.