Another week, another stop start email: Write it: "Trump arranges a meeting with Xi Jinping"… re-write it "Trump and Musk get into a spat." No week seems to pass without some form of schism.
After the best May in over 30 years with Nasdaq up 9% and S&P up 6% we find ourselves sitting in no mans land. The market seems to have bought into the notion that Tariffs and Trade wars and more under control than they looked and that left tails have been reduced (recession, trade war escalation). The counter argument is one of risks around a growing deficit, continued $ weakness and need to reduce $ exposure, an increasingly delicate (and lofty) 30 year bond yield and continued headline risk from Trump.
Global equities had been net bought for 4 weeks in a row. The European train motors on with last week seeing the largest notional long buying seen in 3 months. FX continues to be a factor of growing importance: S&P vs DAX sees a ~20% spread in absolute terms but a ~30% spread post FX adjustments. For the first time in many years US/$ exposure is proving a headwind rather than a tailwind.
