Making sense of this crazy world
Leaders of the pack
It’s been a good week. Actually, it’s been a good three months since the Liberation Day fallout. Technology stocks were on the decline way before this fateful day but there is no doubting their resilience and the appetite from investors, as they have come surging back to be the ‘leaders of the pack’.
Trump once again has given the Federal Reserve (Fed) Chairman a ‘kicking’ in public. This caused stock prices and the dollar to slide due to an announcement from a spokesperson at the White House, who stated that Powell will soon be relieved of his duties. Of course, when markets reacted negatively, Trump came out and said, just an hour later, that he has no plans to replace Powell. Stocks, government bonds and the dollar reacted positively.
What a game!
Helping markets overall was resilient data from the US, which belied fears of an accelerated slowdown and a recession. The rub is that US interest rates are unlikely to come down quickly. In the UK, inflation data surprised and beat expectations on the upside, something to watch carefully moving forward. On the employment front, the jobs market weakened but not as much as anticipated.
Most people roll their eyes when Rachel Reeves is mentioned, and I’m not surprised. Yet, a year on since she was announced as Chancellor, there are signs of encouragement. The Mansion House Speech took place earlier this week and announced huge changes in financial regulation. It’s been thought that overregulation has strangled investment and innovation, and, not unlike the Trump administration, the authorities think it’s gone too far. We’ll explore what this means for the UK. It could certainly be a game changer. Let’s hope so!
This week’s content:
- Investors pile into tech stocks
- The dollar rebounds
- Tech is in the driver’s seat
- Powell bashing moves markets
- The great BIG BEAUTIFUL BILL (BBB)
- How’s the UK faring?
- The strong grounds for optimism
- Rachel Reeves and Mansion House Speech
- Summary
Investors pile into tech stocks
Various data announcements have given the US stock market a boost this week as retail sales were better than expected, and the same goes for jobless claims.
US unemployment claims declined for the fifth straight week in a row, allaying fears of a slowdown on their side of the Atlantic. As a result, the money markets are pricing fewer than two Fed rate cuts this year, having last month priced in three.
The dollar rebounds
Good economic news and a weaker trajectory for interest rate cuts help the dollar.
Consumer spending rose strongly which has given a boost of confidence to economists and investors. As long as the economy continues to expand and unemployment remains low, then companies can continue to generate higher profits. We must not underestimate the impact of AI in generating growth by lowering costs and driving efficiencies.
Continues…
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