I’m currently travelling in the UK, so I’m not glued to a screen 24/7. Although I’m busy, I’m also using this time to take a breather from the markets.
Taking a bit of downtime is something I try to do every now and then – especially when the markets aren’t performing in line with my expectations. It gives me a chance to reflect and reassess.
With everything that’s happened since Trump entered the White House – throwing his weight around and firing off Executive Orders like a traffic warden in London’s West End – it’s nice to get a little respite. In my view, markets are often outperforming the underlying economy, and while many can justify the recent strength in equities (e.g. dollar weakness), I can’t shake the feeling that things may be about to take a turn for the worse.
I’m not personally against Trump or many of the things he’s trying to do – especially when it comes to imposing tariffs on other major powers. I can see the logic behind pressuring countries into renegotiating trade deals. But whatever the outcome, if he actually delivers on what he’s said, there’s bound to be some negative fallout. That’s still very much a big “if.”
His ambitions to bring peace to Ukraine remain unfulfilled, and although the rare-earth deal might prove useful down the line, for now, it’s more of a promissory note than a real breakthrough. That said, if we do see a ceasefire that actually holds, then – God willing – this war could finally come to an end.
Should that happen, I’d expect a decent rally in equity markets and possibly the euro. Still, my suspicion is that any strength we see in the weeks ahead will offer a good shorting opportunity – one that could pay off handsomely over the summer.
The drive to curb inflation in the U.S. isn’t working. While Trump loves to go on about the drop in egg prices, from what I can tell, grocery costs have barely budged since he took office. Yes, gas prices are down, but electricity costs are up, so energy expenses haven’t fallen as much as advertised.
Don’t get me wrong – I believe Trump’s economic policies might work over the long term. But that doesn’t mean we’ll see meaningful results this year.
With that in mind, and considering how murky the broader picture is, I’m holding on to my gold, slightly increasing my BTC position (that market should pick up again once Trump makes a more positive statement about crypto), and as a bit of insurance, I’ll be looking at some put options on equity indices – especially if we get another solid rally.
Being back in my homeland hasn’t exactly filled me with optimism. The UK situation is far from wonderful. The current “regime” – and I use that word deliberately – seems determined to do “a Joe Biden,” namely cause as much damage as possible before being thrown out of office.
Many Brits, with some justification, believe their only hope is to make Nigel Farage Prime Minister. And while most of us enjoy the antics of this affable political rogue, the truth is that – like every other party in the UK – what their senior members know about fiscal policy could probably be written on the back of a cigarette paper. Heaven help us all.
This trip has prompted me to take a lot of risk off the table, and maybe that’s happening at the right time. Cash is probably king right now – though I’ll be glad to dump my sterling the moment I leave the country.
Unless I’ve missed something while on the road, the overall picture remains just as cloudy as it was before – and being in the UK, “cloudy” feels like an apt metaphor for more than just the weather.
Whatever you’re planning to do – don’t bet the kitchen sink on it. Let’s see how things play out over the coming month or so. And even if things do take a turn for the better, give yourself a second before jumping in.
The post It’s Weird and Wonderful being back in the UK first appeared on JP Fund Services.
The post It’s Weird and Wonderful being back in the UK appeared first on JP Fund Services.
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