Following Thursday‘s wild retracement, S&P 500 rebounded as called Friday, bucking poor UoM consumer data. Grinding up, while the daily sectoral view might not be stellar, there was fine buying during the day and at the close – with 5-day sectoral view looking understandably better.

What‘s key, is that all clients were again ready for another positive tariff headline Saturday, just as they were ahead of Wednesday‘s opening bell (Lutnick statement reintroduces uncertainty, but doesn‘t erase upcoming bullish Sunday gap). Such is the nature of the market – the incentives to escalate and deescalate must be viewed not just through the geopolitics lens, but through the pain the bond and forex markets inflict – and that‘s what I had been talking in the latter half of this week as regards the steeply rising 10y yield and cratering USD.

What had been the other consequences and macro / fundamental setup as we enter another great week? Extensive weekend video as usual deals with stocks, bonds, USD, sectors, volatility, precious metals and oil incl. BTC. Path ahead given what we experienced in this smashing reversal week  part and parcel of which is adjusting the asset class weights of what to be invested in (whether long or short).

It‘s undeniable that the consumer is fearful, expecting high inflation and rising unemployment, but many inflation metrics (with my earlier calls) actually point to inflation having peaked for now. Great fear also seen in retail selling of S&P 500 (quite a record gap vs. smart money buying) – this presents a great contrarian opportunity, and the point is again to be positioned as we were early Wednesday and now into the weekend.

Note as well how DAX and FXI are holding relatively well – China is especially notable given that it‘s the only country that chose confrontation. Midweek, I was also talking with clients the windfall role of swing bloc that Europe is playing in the great powers struggle – and sure it did cut some deals (EV) with China, reviving some multipolatrity talk from a surprise angle.

When in doubt, look at the great pacifier, the bond market – it‘s irrelevant which money center is selling (lion‘s share must be Japan, and no, it‘s not because of yen carry trade or Norinchunkin) – and it‘s clear whose twisted hand led to Saturday‘s tariff exemptions…

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