The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Worry growing.
Despite a relatively quiet weekend, the markets’ nerves remained frazzled. S&P futures traded off about 30 points in the premarket but they recovered shortly before the open. The index itself opened about flat only to fall down after 10 minutes. The entire morning resulted in a steady slide for the index and we bumped along for the rest of the day, down about 80 points. Treasury yields fell across the curve in what looks like a minor version of a flight to safety. Capital flow was only a touch higher than usual at 106%.
Three main stories stoked concern for investors today. The AI scare continues, the Iran situation continues, and the Trump tariff situation continues. Each situation is packed with uncertainty. Each situation is lacking specifics too. The AI scare remains as vague as ever, its ongoing presence weighs down broader sentiment. The Iranians haven’t agreed to anything yet and talks are scheduled in Geneva on Thursday but investors still worry about a non-diplomatic outcome. President Trump upped his 10% global tariffs to 15% over the weekend. Markets are wondering what other actions he might take and what the rest of the world might do.
There is a fourth story out there too, though it is less significant than the above three. It is the concern about the private credit market. Blue Owl Capital gated one of their funds and now investors are wondering whether this is a sign of the whole market going south. Nobody knows of course but private credit has been a frequently cited risk to all markets over the past few years. With a new, and specific, story about private credit swirling around the Street, it adds to the risk-off vibe across markets.
It is interesting how a combination of different risks are stacking in the minds of the markets. The narratives around each risk are valid but vague and perhaps that is what allows them to persist and grow. If a particular story were to break, at lease investors could decide what to discount and what not to. While everything remains nebulous, everything gets discounted.
Until specific stories break, I think we’re stuck in a slow-motion risk-off funk. The market can’t shake off this odd confluence of nondescript risks. In the past, the lack of details would usually limit the amount of time investors would remain worried about something. In this moment, the lack of details is what’s allowing the fears to hang around.
Maybe some details, even bearish ones, will lift the heaviness of all the uncertainty.
See you tomorrow.
-Mike
Visdom Market Commentary
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