Resetting
Trades in Whisky and Soda;
The US Treasury Secretary, Scott Bessent, was interviewed on CNBC to make the point that they are working to avoid a financial crisis that could be the result of massive government spending over the past few years. He said, “We are resetting, and we are putting things on a sustainable path.”
There are no guarantees there won’t be a recession, but that doesn’t even phase him. He makes the point that after 35 years in the investment business, and at the forefront of it, I might add, he sees market corrections as normal. He’s not worried about the market, as “over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
He’s right. Reading between the lines, he’s saying that the government does not create bull markets. Their job is to create good business conditions, such as competitive taxes, less regulation and a sound energy policy, and financial markets will take care of themselves. The trouble with the US equity bull market he inherited is that it was partly fuelled by a government deficit. He is genuinely concerned about the state of the outsized bond market and is egging on DOGE from the sidelines.
He may have a point, but this is creating mixed signals. For example, the weakest business expectations for years.
University of Michigan Change in Business Conditions
And then you see the price of copper making an all-time high, something I would associate with strong global growth. Could that really be happening when there’s so much talk of recession? Gold making highs is one thing, as it thrives on uncertainty, but copper?
Copper Price Makes an All-time High
Commodity prices are strengthening, and that is something to be aware of. It could be due to high demand, but more likely, it is the result of tariffs. Commodities are only useful when they are in the correct port. With the seismic shift in markets, there is so much to take in. What’s most important is to stay on the right side of the change. When the facts change…
I have two important trades this week. I’m adding a European fintech company while selling the yen.
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