Closing Thoughts for the Week

Not surprisingly, geopolitics dominated the narrative, but for different reasons than we’ve seen in the recent past. The clear implication of this is that it could push Fed rate cuts further into the future the longer this conflict continues. One of deregulation’s biggest beneficiaries is the energy sector. The risk of another big reverse yen carry trade, which almost certainly didn’t end with what happened in August, could damage global equities even more.

While not directly a market-related event, the social media sparring match between Donald Trump and Elon Musk will likely be remembered as the highlight of the week. From an economic view, the labor market data was mostly mixed. Overall, investors seem to be in a relatively decent mood still as the primary risks remain on the geopolitical front.

It was one of the most volatile weeks in terms of trade war developments yet, however, the markets largely reacted with a big “meh”. It feels like the markets have gotten tariff fatigue and are becoming fine with just ignoring short-term developments knowing that they’re probably going to change again in a day or two. For those looking for some sense of predictability and/or stability in this market, there probably won’t be much for a while.