Are we in a Bull Trap or a New Unprecedented Cyclical Rally?
Many seasoned investors are scratching their heads in some confusion.
In the past week, President Trump has renewed his tariff war threats on allies. Yet, unlike the jarring financial reaction recorded in April, stock markets around the world kept their near-vertical ascent.
In the last few sessions, amidst the summer heat the UK FTSE 100 Index jumped to record highs. Joining the bull run into fresh levels were the German DAX 40, Singaporean Strait-Times Index, tech-heavy Nasdaq 100, and blue-chip S&P 500 Index. A few other equity indices also hit new long-term highs, including the Italian FTSEMIB Index and Korean KOSPI Index. The former sits at 18-year highs; while the latter has delivered positive returns in five of the last six weeks, thus matching the sharp gains delivered back in 2020 (see below).
In sum, global equities are partying like it’s 2021 (or 1999) again!
No wonder the US administration is fearless these days. Trump briskly announced 30 percent tariff rates on Mexico and EU by August 1. Rather than dipping on these tariff threats, the equity market has delivered its near-unanimous verdict: All fine and good?
