Market Factors: Why I’m a very unhappy pundit right now

The Barlow Returns edition of this newsletter outlines why I’m a market pundit who really despises current market conditions for their Trumpian unforecastability. Some remarkably counterintuitive global money flows are detailed and a study of the musical tastes of psychopaths forms the diversion.

Volatility

Market whiplash makes market commentary problematic

Not to bother readers with my problems, but it’s currently impossible to write productively about strategy in the Trump era.

Take last Wednesday for example. Markets started the day deeply in the red and talk turned to bargain hunting for oversold opportunities. I wrote a column as to why I had no interest in doing so and had adopted a “10-foot pole” strategy. The reasons were hedge fund deleveraging in bonds, declining U.S. earnings visibility that made it hard to value stocks, a deterioration in U.S. “exceptionalism” and the potential for a North America-wide recession.

U.S. President Donald Trump announced a pause in tariff enactments at 1 pm ET Wednesday and the S&P 500 surged almost 10 per cent. We didn’t publish my column of course because no one’s going to read “Why I won’t touch this market with a 10-foot pole” after one of its biggest up days in history.

I hate this market but that’s different from saying I think it’s going to crater. I hate it because there is no predicting what Mr. Trump’s going to do and therefore no way to forecast the near-term path of equities. We merely got a 90-day reprieve.

The path of the big dollar is likely lower because of the ongoing erosion in trust in U.S. leadership. The U.S. trade weighted dollar index, which is historically higher in periods of market volatility, is lower by 3.2 per cent versus the January high.

Foreign investors are selling U.S. assets at a pace rapid enough that Deutsche Bank head of foreign exchange strategist George Saravelos voiced concerns about a “broader confidence crisis” for the greenback in an early April research report. A three-year Treasury bond auction last week was met by extremely weak demand as buyers stayed away in expectation that prices were set to fall and yields rise. To be fair, bond auctions later in the week went smoother.

There are likely bargain stocks out there. I haven’t looked deeply at it but Pfizer Inc. for example, a company very, very unlikely to fail, has an intriguing dividend yield of 8 per cent and this implies to me that there are oversold companies out there. Cheap or not, however, these stocks could get caught up in the wash of a completely unpredictable market and the arbitrary policies of a truculent U.S. president.

The 90-day reprieve on tariff decisions is helpful for markets in the short term but investors are likely to start sweating and selling as the new deadline approaches (unless there’s new related proclamations in the meantime, which would pull the volatility forward).

This is not a good time to be making investment decisions so investors shouldn’t make any, except possibly to raise some cash to limit volatility (NOT to time the market) and hope sanity prevails.

New money chases equities despite volatility

Global investors steadily bought equities through last week’s volatility – a 2025 record US$50-billion of them according to Deutsche Bank strategist Parag Thatte.

Mr. Thatte noted that systematic fund equity positioning (algorithm-oriented portfolios like Commodity Trading Advisors) are at extreme lows nearing early COVID levels. Discretionary fund positioning, by contrast, is lower than average in preparation for weak U.S. economic data, but not at extremes.

The market sell-off has been driven by positioning – existing fund assets moving out of equities and into money markets or fixed income. New money just keeps on buying stocks. The strategist emphasizes that market volatility like last week usually sees outflows. This time, however, US$31-billion of U.S. equities were purchased and $50-billion in global stocks.

The heaviest selling in U.S. stocks has occurred in overnight hours in futures markets. Mr. Thatte believes this represents foreign investors removing exposure to U.S. assets.

Diversions

Psychopaths’ favourite tunes

Alan Cross is almost certainly the country’s most prominent music journalist and his website A Journal of Musical Things is a consistent source of entertainment and Diddy updates. A recent post, This study reveals the favourite songs of psychopaths, highlighted a New York University experiment that measured psychopathy levels and then musical tastes. “Lose Yourself” by Eminem was cited along with “No Diggity” by Blackstreet. “My Sharona” by The Knack was a favourite of the least psychopathic people.

The post includes a link to more details from American Songwriter.

The essentials

Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page.

Globe Investor highlights

Feeling Trumped out? Tim Shufelt provides four good reasons for investors to unfollow the president. Sticking to that same theme, Tom Bradley provides his best advice right now.

Clyde Russell of Reuters updates us on the latest outlook for gold. He concludes gold is as much of a hostage to Trump’s erratic and inconsistent trade and economic policies as any other asset.

Scott Clayton crunched the latest numbers to find this list of beaten-up stocks with sustainable dividends in the integrated oil and gas sector.

John Heinzl on the investment case for restaurant royalty stocks at a time when they’re in the dumps.

What’s up next

The domestic economic calendar is light but important. Manufacturing sales for February is out Tuesday and a 0.2 per cent month-over-month decline is expected. CPI for March is also reported Tuesday – a rise of 2.7 per cent year over year is forecast. The Bank of Canada reveals its decision on interest rates on Wednesday. The majority of economists expect a hold.

For important earnings reports, we have Metro Inc. releasing numbers on Wednesday. Analysts estimate C$1.024 per share.

South of the border, advanced retail sales for March is announced Wednesday, with a 1.4 per cent monthly increase predicted. March industrial production is reported the same day – a monthly decline of 0.2 per cent is the forecast.

U.S. earnings season heats up this week. Goldman Sachs already reported Monday, announcing profits of $14.12 per share whereas analysts expected $12.35. Bank of America ($0.816) and Citigroup ($1.841) are out on Tuesday. Abbott Laboratories ($1.070) reports Wednesday and Netflix Inc. ($5.692) on Thursday.