Truflation and Acquired take a look
Trump’s 2nd term is causing a stir, that’s for sure; a day does not go by without him making headlines of one sort or another. Whether it be tariffs, the Middle East, or Greenland, to name but a few. The timings of these announcements have, at times, caused the market to take fright; this and recent concerns that the arrival of DeepSeek questioned the vast amounts of capital that the Mag 7 are spending on AI learning is justified also sent shock waves through the US tech sector. According to one financial report, these headlines have led to hedge funds are now betting on a US recession.
Despite these uncertainties so far, it seems the US market is just about giving Mr Trump the benefit of the doubt; the S&P 500 is up, if only modestly on the year, as is the Russell 2000. There are modest warning signs as the Vix fear gauge is higher on the year, suggesting some portfolio managers are starting to pay up to insure their portfolios.
I went to a Julius Baer Outlook presentation yesterday. The garden looks rosy through their tinted glasses, and the message is to keep buying or at least not get off the train. There may be some volatility along the way, but weather the storm, and the S&P 500 will reward you by the end of the year. That one thinks is a consensus.
Indeed, earnings season has got off to a decent start overall, with the usual caveat that those that evenly marginally disappoint get battered. One of the big questions for the year ahead is whether the market overestimates the probability of inflation heading back to the central bank’s 2% target.
Truflation, according to its website, is a modern inflation tracker built on blockchain technology. It uses decentralised devices to deliver real-time inflation data by gathering price information from over 18 million items across 12 categories. Rather interestingly, as traditional methods of forecasting inflation have been rising, on the back of Trump’s return, the Truflations measure has collapsed from over 3% to just over 2% in the past month or so. In contrast, the UK, according to the monthly report of the ONS, fell to 2.5%, while Truflation had UK inflation running at 3.6%. It’s always good to get another view. I think it remains relatively safe to say we get a 25 basis point cut tomorrow from the Bank of England.
I had the good chance to meet an old friend this week, who introduced me to a fantastic podcast site, Acquired. The Wall Street Journal calls it “the business world’s favourite podcast.” The podcasts don’t just analyse some of the world’s greatest companies; they explain the company’s origins. Even for non-investors or followers of stock markets, it’s a must.