Insufficient to Break the Equity Structure
A weekly look at what matters and how to trade it. (January 26th)
Last week was one of those weeks. Plenty of noise, very little follow-through.
US equities were briefly shaken after President Trump escalated rhetoric around Greenland, threatening tariffs on allies and reviving fears of a broader geopolitical fracture. The S&P 500’s sharp drop on Tuesday reflected that anxiety, but it never evolved into a sustained “Sell America” moment. Instead, the pressure was most evident in FX. The dollar took the full brunt of the move, posting its weakest week since May, while equities proved more resilient. A softer USD, in turn, offered relief to megacap tech and capped downside follow-through.
However, it wouldn’t be fair to say that there was no follow-through on the other side of the world: Japan. Prime Minister Sanae Takaichi helped roil markets with an election pitch to cut taxes despite the country’s sizeable debt burden and elevated inflation. Long-end yields flew higher to multi-decade highs as JGBs continued to be sold.
That was all capped by some Yentervention to end the week, forewarned by the team a few weeks ago.
The result of it all was multiple headline-grabbing trades racking up swift returns or losses.
Political risk proved potent enough to move currencies, but insufficient to break the equity structure. With earnings looming and policy uncertainty unresolved, markets continue to absorb shocks without committing to a new trend. For now, volatility remains episodic, liquidity-driven, and selective… more about where investors are rotating than what they are abandoning.
Let’s get into the guide to trades moving markets, where things stand and where they may be heading.
“Tacos Were Served, and Big Macs Are Coming”
“Swissie Haven Bid Kicks On”
“Cold ‘Murica, Hot Nat Gas”
“Yentervention”
“Cusp of a Commodity Supercycle”
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