Equities high, certainty low

The S&P 500 has retraced more than two thirds of its losses since liberation day, the Nasdaq is above 20000, the DAX is at an all-time high, and China is not down despite all the uncertainty on tariffs. Equities have clearly bought into the rhetoric that we have seen peak disruptiveness and normalisation is beckoning the bull market back to life.

The risk markets are not so sure. Long-term yields remain stubbornly high, and you would have thought that threatening to fire the Fed Chairman to lower interest rates did not exactly inspire confidence in the treasury markets. The Dollar has also not bounced as much as one would have expected, and Gold is still pricing in the apocalypse.

Which asset class tends to be the more accurate in foreboding that which has yet to pass? That depends on the time horizon, but more importantly, investors tend to buy one or the other. As such, it is hard to imagine that equities have that much room to advance further if we keep hording safe haven assets in large measure.

Never fear, cryptocurrencies are here, and the “others”, or those not in the top ten market capitalisation, are up more than 60% from last month's lows. Lest we forget they are still down 43% from the peak in 2022. Nevertheless, if investors are piling into coins that have the antecedent that stands for faeces, it’s clearly risk-on.