Global markets have been full of cross-currents lately. Optimism and anxiety swirling in the same tide. Corporate earnings have mostly come in stronger than expected, keeping the narrative of US resilience alive.
Central banks, once the villains of tightening, now seem to be leaning toward a more forgiving stance. Liquidity is improving, and risk assets have been quick to celebrate.
Not everything glitters. Political wrangling in Washington, renewed trade tensions between the US and China, and pockets of speculative excess have reminded investors that this is no straight path upward. From the return of meme stocks to the latest round of AI-driven euphoria, it is hard for some of us not to feel echoes of the late-1990s, only this time, the bubble comes with better Wi-Fi.
The mood is optimistic but not entirely comfortable at the moment. Fundamentals remain sound, yet the behavior of some corners of the market feels stretched. The best approach is to stay invested but not intoxicated by momentum.
Well, do not get me wrong. I’m still a long-term bull. I just prefer my optimism to come seasoned with a dose of realism, especially as we head into the holiday season when markets and moods tend to get a little too cheerful for their own good.
In our team discussion today, we walked through a few dozen charts spanning equities, bonds, commodities, and currencies. Each painted its own version of the same theme. Some of the moves made sense, others defied logic but that is what makes markets fascinating.