adriant

adriant

  • Joined: December 24, 2025
  • Articles: 484

US Dollar Rally Ahead?

Are we about to see a US Dollar Index (DXY) rally sometime over the next few months? If I were to guess - yes. And if that's correct - it's not a tailwind for markets (or earnings). Before I look at the weekly chart - not all participants agree. Bank of America Securities views any strength in the US dollar index (which trades against a basket of six currencies) as short-lived and prefers to fade any greenback rallies. And that is probably accurate in the very short term.

Focus on High Quality in Challenging Markets

It's my thesis market returns over the next few years are unlikely to match what we've seen over the past decade. However, I'm also of the view that will create great opportunities for savvy patient investors who think long-term. This missive defines what is meant by "quality" investments - and the attributes investors should focus on. And if we are see a more challenging climate the next few years - it's higher quality assets which will shine.

Relief Rally Likely to be Temporary

Despite the welcomed relief rally - stocks are not out of the woods. The uncertainty introduced from Trump has inflicted a lot of damage. Not only on the market and its earnings - but on investor, consumer and business confidence. However, the full extent of the damage will only be felt in the months (years) ahead. For example, Bankim Chadha of Deutsche Bank has reduced his target for the S&P 500 for the year, citing doubts over whether tariff policies will be abandoned before they have already driven the economy into a recession. This echoes what I said recently "we could already be in recession"

Trump Wants Lower Rates – Will He Get It?

Trump is demanding the Federal Reserve lower rates. However, Fed Reserve Chair Jay Powell - is having none of it (and nor should he). This is setting up another showdown between the President and the world's top central banker... a repeat of what we saw in 2018. As we all know Trump is a real-estate guy. Property is a business that relies heavily on cheap money. And this is the same lens Trump is taking with respect to his growth agenda. But he may not get what he wants...

Will Common Sense Prevail?

For the past few weeks we've watched Trump double down on dumb. There are no winners from tariffs - only losers. Perhaps the biggest loser of all will be the US consumer... forced to pay higher prices for almost all goods. Is that the goal? From Trump's lens - China has been "ripping the US off" for decades. Why does he think this? The President will cite the US' ~$1T trade deficit with the Middle Kingdom... which has doubled in 5 years. But this isn't necessarily a bad thing... here's why

Are We Closer to a Market Bottom?

It's very difficult to know if we're at or close to a market bottom. They rarely occur over the space of weeks - it generally takes months. But I cannot predict when (or what) the bottom will be. However, I think the ~20% correction from the market high (6147) to the low (4834) tells me a large portion of the selling is behind us. For example, we're now starting to see equity exposure significantly reduced and cash levels raised. This is a good sign... as there are a lot less people to sell.

‘Trump Dump’ Offers Opportunity

It's official... the stock market is now 'on sale'. Panic selling has set in with the VIX trading above 45 - something we have only seen 7 times over the past 25 years. For those who resisted chasing extreme valuations the past 12 months - your patience has been rewarded. Valuations have come down. In turn, the longer-term risk reward is now more attractive than what it was only a couple of months ago. But these are rare times. For e.g., it was the only third time this decade that the S&P 500 shed more than 10% in two days.

Downside Unlikely Over

From the moment Trump announced his blanket 10% tariffs in addition to so-called "reciprocal levies" - it's been an exodus from risk assets. The selling was immediate and sharp - something we've not seen since the pandemic five years ago. However, as I will demonstrate, there could be more to come. And from mine - further sharp selling could set up a great buying opportunity for long-term investors.

Uncertainty Weighs

It doesn't take much these days to knock investors off balance. This week it was Trump's 25% on auto tariffs and a slightly hotter-than-expected inflation print. Tariffs are inflationary... a tax on the consumer. And with (services) inflation remaining stubborn... it gives the Fed very little wiggle room to cut rates. In combination with various geopolitical developments and aggressive government spending cuts from the Department of Government Efficiency (DOGE) - this has pushed policy uncertainty to its highest levels since late 2020.

Worry About Growth – Not Inflation

Some people are concerned about mounting inflationary risks. For example, it was only last week the Fed raised its inflation projections - where core inflation is expected to grow at a 2.8% annual pace, up 0.3 percentage points from the prior reading. And whilst inflation may remain sticky in areas like services and shelter (which I will talk to more shortly) - I think we should be more concerned with growth.