Although the US Federal Reserve kept its key interest rates unchanged, markets allowed themselves to relax into risk and a better mood swept across many of the investment suites. Despite the FED now expecting unemployment to rise from 4.1% to 4.4% and GDP to reduce from 2.1% to 1.7%, investors seemed to focus on Jerome Powell’s post-match press conference where he warned on inflation likely increasing due to tariffs, but such acceleration would at present be “transitory.” When addressing the idea of a recession, he said the chances "were extremely low; if you go back two months, it has moved up, but it's not high." The cherry on the relief cake came from his opinion that while surveys might portray a US population being worried about spending, such qualitative assessments do not often match behaviour and hard data at present remained solid. Still, leaving interest rates unchanged is a sure-fire nod toward future tariff turmoil recognised by his admission, “There are so many things we don’t know.”

Oil prices felt the benevolence of the wider suite and rallied in kind. However, there was a decent tailwind coming from the US Inventory Report. Although Crude stock increased by 1.7mb, they are 8mb down on the year and some 19mb below the 5-year average. But what instilled buying interest came from Gasoline stocks now being at their lowest this year as we approach the hallowed driving season of the summer. Seasonality is not done with Distillate yet, the 2.8mb draw is not just a result of lower refiner runs. Implied demand is up 5.9% on the year and with Henry Hub Gas prices remaining elevated, there remains the remnants of a ‘switch’ bid. Volodymyr Zelensky agreed to the ceasefire of targeting energy infrastructure if it was formalised, but it is a long way from an end to the war, and with Israel literally running tanks over its own ceasefire in Gaza, conflict anxiety has aided oil’s step higher.

Troublesome times, caused by troublesome leaders

It is becoming a depressing truth that the higher one climbs in the political sphere the more it is acceptable to obfuscate, lie and operate outside of common practice and indeed decency. The zenith of this contemporary phenomenon (or is it the nadir?) can be seen playing out in Washington, Moscow, Tel Aviv and numerous other seats of political power around the globe with little in the form of chastening regulatory oversight. Those of us involved in financial markets are at some point subjected to the judgement of being a fit and proper person, where is such criteria for those with fingers on buttons of billions of dollars and devastating warcraft? Still, we are all complicit, we pride in being part of democracy and the will of the majority and therefore collectively are responsible. The anti-enlightenment philosopher, Joseph Marie, comte de Maistre, is well-quoted as saying and paraphrased, “Society gets the government/politicians it deserves.” Indeed, de Maistre was a monarchist and arguably a supporter of the Divine Right of Kings, therefore, he might just have approved of the dictator traits of some of the modern leaders that plague this globe.

According to Kyiv, more than 200 drones were fired at Ukraine only hours after the agreement to cease attacks on energy infrastructure. It is unclear whether power plants were targeted, and indeed, Ukraine did launch its own barrage against the aggressor. However, If confirmed, then the misgivings against the trustworthiness of Vladmir Putin gains even more credence. Ukrainian warnings of habitual lying are nothing new, back in 2023, Dmytro Kuleba, the Minister of Foreign affairs and diplomat to the EU, when questioned on a possible peace deal listed off a rant of evidence against the reliability of Russia as a good faith negotiator. The Budapest Memorandum of 1994, breached by Russia invading Crimea in 2014. The OSCE Istanbul Summit in 1999, Russia committed to withdrawing its troops from Moldova, it never happened. These are but a few in his extensive list but cuttingly, Kuleba concluded, “There are no conclusions to be drawn here, except that no one can seriously use the words ’Russia’ and ‘negotiations’ in the same phrase.”

Benjamin Netanyahu continues to stamp all over his previous international appeasing support for the ‘two-state solution’. Indestructible Bibi has been paying lip service to US Presidents for 30 years and speeches made in the grand auditoria of politics have always been a far cry in content when faced with smaller Israeli audiences. During a visit to illegal settlements on the West Bank in 2001 he said he was not afraid to clash with the ‘pro-Palestinian’ Clinton and (paraphrased) would not be afraid to walk back on the peace initiatives of the Oslo Accords. Joe Biden found it nigh on impossible to control the Israeli Prime Minister’s flattening of Gaza and routing of Iranian proxies, Donald Trump endorses it. After the shocking breaking of the current ceasefire and the death of over 400 Palestinians from Israel’s bombing, it was revealed that White House permission had been sought before the current sortie. White House Press Secretary Karoline Leavitt confirmed that the Netanyahu government consulted with the Trump administration ahead of the latest Gaza bombardment. Leavitt expressed the White House's total support for Israel's attacks. A ceasefire with Israel now appears as reliable firmament as the sands of the Nile.
All the while the counter-tariff deadline of April 2 ever nears and the threat to global trade is being represented by investors as they evacuate US stock markets for grasses greener. The greatest indicator of a world in flux remains in the most famous tangible asset. Gold has pushed on through $3000/ounce as rattled risk takers seek haven. Even the US Dollar flunks under the pressure it feels from the Euro. Oddly it is the untrustworthiness of the US President that has turned the fortunes of the common currency and the bourses of Europe. Trump’s failure to guarantee a European intervention in Ukraine and a willingness to accede leadership in NATO has set the rearmament cat among the wannabe doves of peace. The eye-watering bust of Germany’s fiscal discipline to spend Eur500 billion on the military brings a whole new set of investor hope into the old continent. However, it should also bring concern. Uncle Sam has always been the leader of NATO for a reason. It has been the guarantor of Europe for 80 years and the anniversary of the end of WWII this year ought to be a reminder why. When Europe decides to rearm itself, it has historically not turned out that well for the world.

Tariffs, duplicity, ceasefire breaking and world leaders without restrictions or moral integrity can never be conducive to confidence in markets. There has been enough money made on the stellar performance of the US stock markets and maybe these bourses will coast for a while until a better environment presents itself. But predicting when easier trading times will come is a market in itself. Meanwhile, the rally in the DAX, the Euro, the Hang Seng are all based on the fallout of political unreliability. Nothing is guaranteed, not even the relevance of this missive by the time it hits your inbox. This is a churn, one that has no end in sight.  

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