Weekly Commentary: Uncertainty Squared

2025-06-07 05:45:12 ET

When you thought things couldn't possibly get any weirder… ("Have a nice day, DJT!")

"Uncertainty" is the word of the year, for an environment dominating by a unique array of uncertainties - policy, market, economic, geopolitical… There are tariff and trade war uncertainties, highlighted by the President's uniquely whimsical approach. With a third of the 90-day pause period remaining, it's unclear how many trade deals can be squeezed into such a short negotiations window - and how much hardball the administration is willing to play as the deadline approaches. More specifically, complex trade agreements with the EU and China will require extensive, and likely protracted, talks.

While markets are said to abhor uncertainty, stocks these days seem to eat it up. It's basically uncertainty on top of uncertainty. The world has never been so awash in speculative finance, ensuring aberrant market behavior. Never has the global leveraged speculating community been as colossal and powerful. Egregious Treasury "basis trade" leveraging drives unprecedented overall hedge fund leverage. Household (loving dip buying) market participation is unparalleled, with the proliferation of online accounts, options trading, and herd-like speculation creating extraordinary market-moving power....

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