The turbulence of early April – those chaotic days around the 9th – now feels like a distant memory. So, what lies ahead?
Since President Trump chose to extend his introduction of tariffs, we’ve entered a prolonged period of consolidation. Most markets have been range-bound, as major players reassess their positions and try to anticipate the next move.
Yes, there’s been some movement here and there, but unless you’ve been actively speculating, it’s been hard to find anything truly compelling to sink your investment teeth into.
That said, a bit of calm has likely been welcomed by many after the wild swings that followed Trump’s return to office. Still, much of the recent stability masks an underlying risk-off sentiment – unsurprising, considering how many traders were caught offside in early April.
Equity markets have held up reasonably well over the past two months. In particular, US equities, which have clawed back some of the ground they lost to their European counterparts. However, with that rebound now largely complete, many of these markets seem to be running into resistance.
Despite the recent strength, sentiment among economists remains cautious. Some are wary due to seasonal patterns – sell in May and go away – while others simply doubt the sustainability of Trump’s economic agenda. Whatever their reasons, there’s a palpable reluctance to fully embrace the rally, which makes it difficult to feel confident about further upside. Personally, I’d be looking to sell into rallies over the next week or two.
Last week, I explored Trump’s unusual preference for a weaker dollar – a stance that runs counter to the traditional posture of US Presidents. Whether the recent softness in the dollar will continue is uncertain, but given the broader issues facing other economies, I wouldn’t be surprised to see a rebound in the greenback over the coming weeks.
What might trigger that? It’s hard to say, but the escalation of the war in Ukraine remains a key factor. Let me be clear: I do not condone profiting from human suffering. However, markets respond to geopolitical shocks – and wars do move markets.
I had hoped for progress toward peace in Ukraine. While Trump has made efforts in that direction, it’s increasingly clear that NATO – and too many European leaders – appear to have little real interest in ending the conflict. Provoking Putin, however distasteful his regime may be, and empowering Zelensky to continue the fight won’t lead to de-escalation. It’s hard to see how this path leads to meaningful negotiation.
I hope I’m wrong. But if this war drags on, it won’t benefit anyone – except perhaps those long Bitcoin, gold, or certain energy plays.
Speaking of energy, oil has repeatedly tested resistance around $64 in recent months. While many of us would prefer to see it settle closer to $50, if that $64 level breaks, we could see a wave of short covering that takes us quickly toward – and possibly beyond – the $72 mark. I currently have no direct exposure to oil, but it’s firmly on my radar.
Another point of note: the ongoing resilience of both the British pound and UK equities continues to surprise me. As a Brit, I don’t want to see the UK falter. But the current government, in my view, has systematically failed its people. The British taxpayer is being squeezed dry by a government that has done little but mislead since day one. Of course, most countries have their frustrations with the ruling class, but the disconnect in the UK feels especially acute right now.
Under this regime, I see no viable long-term path forward for the UK economy. I’m currently out of sterling, and if GBP/USD approaches 1.40, I’ll be looking to go short.
For now, I’ve mostly kept my powder dry – dabbling in short-term trades within the prevailing ranges. But those ranges won’t last forever. I thought I’d share these perspectives as we head into what could be a pivotal few months.
Let’s see how it all plays out.
The post After the storms of April & May, what’s in store for June? first appeared on JP Fund Services.
The post After the storms of April & May, what’s in store for June? appeared first on JP Fund Services.
The post After the storms of April & May, what’s in store for June? first appeared on trademakers.