A lot of people have been asking me about my general views on the market right now. (and when I say a lot, I mean about 9 people)

So here you go.

My ‘shorthand’ views on the economy, stocks, bonds and everything in between (this could have been 10,000 words, but literally nobody wants that, not even one.)

If you are feeling particularly sadistic, feel free to reach out, happy to expand and discuss in more detail.

Sometimes we get very caught up in the current rumblings so it’s good to pull back and determine the general direction of travel, or at least your opinion of it given the weight of the evidence. From there, you can structure your portfolio around the most probabilistic outcome and add in some diversification to protect if and when your base case doesn’t play out.

Good investing is just about making high probabilistic decisions over and over again.

So, with that said, here is my 10,000 Foot View

$10 trillion has been pumped into the system in the last 5 years.

The number of U.S. listed public companies has gone from approximately 8000 to 5000 in 30 years.

More and more money chasing fewer and fewer assets.

Asset price inflation should not be a surprise. If you’re expecting valuations to revert to long term historical averages for a sustained period, during this period of fiscal excess, you will be left waiting.

Whether you agree or not from an economic perspective (I certainly don’t), there is no political will to stop spending.

Yes, Bessent talks about ‘reducing the deficit’ but the DOGE and Tariff attempts to ‘fund the gap’ have failed and now the ‘Big Beautiful Bill’ will add $3.3 trillion to the deficit over the next 10 years.

Watch what they do, not what they say.

They have backed themselves into a corner on the deficit side and the only realistic way out is inflating away the debt. The best way to do this? Currency debasement.

This makes U.S exports more competitive, narrows the trade deficit and inflates away the value of the debt owed to foreign owners of Treasuries. A significantly cheaper dollar solves most of trump’s problems to be honest.

To be clear, this does not need to be viewed as an apocalyptic outcome. Low but positive GDP growth with a slow bleed on the debt side is a win in my book.

You don’t have to agree with this policy; you just need to be aware of the rules of the game being played. Once you accept that, you can position yourself accordingly.

At the highest possible level, if global government’s solution is to inflate away the problem, own assets that inflate with it.

I repeat… OWN THINGS!!! Otherwise, you’ll get left behind.

Let’s skip the Tariff recap and get straight into it.

There has been endless news about ‘negative sentiment’ recently but during times of perceived stress, soft survey data tends to be more exaggerated than actual hard data.

You also have the added bonus of politicised media outlets pumping whatever sentiment fits their narrative.

What you’re left with is everyone shouting at each other about how terrible everything.

So, what can we do to drown out to noise?

My advice - Look at the ACTUAL data.

Company Earnings have remained near records. S&P 500 companies delivered a very healthy +13.3% year-on-year earnings growth in Q1 2025.

I’m not trying to diminish uncertainty; there are always reasons to worry. But when the headlines are screaming, it helps to look at the data to see what is actually going on.

Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the downward trend of inflation remains intact.

The economy remains healthy while growth continues to normalise from much hotter levels earlier in the cycle.

Looking ahead, we need to track certain data points closely:

In short, while the markets will invariably continue to worry about trade deals, the U.S. debt, and the health of the economy in the coming months, the current data shows we are neither overheating nor unraveling.

A stressful start to the quarter for all investors was immediately followed by the best May for the S&P 500 in 35 years.

This serves as a real-time example of what makes investing so difficult from a behavioral standpoint. So many of the markets’ worst days are immediately followed by a cluster of great days.

Ex-US valuations are more palatable. I expect to see the valuation gap reduce as multiple for international stocks play catch-up, but the US valuation premium will remain in my view.

My view - Don’t believe the Tech fade. Yes, certainly not bullish on all names here (*cough, Apple *cough) but you need to follow the growth.

The Mag7 stocks have accounted for roughly 43.4% of the S&P 500’s total return since the April low, a strong turnaround considering the underperformance we saw at the start of the year. The latest boost comes from positive Q1 earnings results and strong signals that the AI investment cycle continues to gain momentum.

Healthcare, utilities - also attractive.

All-in-all, there will be U.S. political uncertainty, geopolitical risk, and plenty of unknown unknowns to monitor. But taking a step back, the long-term outlook remains constructive. Opportunities for those willing to absorb and take advantage of the short-term volatility.

If you have been reading my stuff for a while, you will already know the 95% of financial media coverage annoys me, and they’re at it again.

I actually find it embarrassing at this point. Headlines about bonds ‘crashing’.

There is this idea that the financial media loves to pedal when yields start to rise. They create this perception that yield will just rise and rise and rise and ‘what happens then’?

The same apocalyptic scenario every time.

But yields are self-correcting. If yields rise, insurance companies, pension funds, come in and take the higher yield on offer. Higher yields catching a bid shouldn’t be a surprise.  

The evidence is in the flows.

Yes, yields have moved around a bit recently, but when you break it down, rates initially dropped sharply on fears of a tariff-driven recession. As those tariffs were rolled back, rates snapped back to roughly where they were before the whole episode. Net-net, interest rates have been more or less flat for over two years and the long end has ‘uninverted’.

A lot of ‘panic-talk’ when I would argue the bond market is better today than it has been in a while.

The “Big Beautiful Bill” and the 8% deficits makes long duration plays difficult over the short-term but with the long end of the curve higher, you will be able to pick up some true duration protection as a hedge for the first time in a long time, while still picking up the income yield by keeping the majority of your exposure on the shorter end.

The yield curve has normalized. A win for portfolio construction in my books.

So, that’s where I stand. Plenty of noise out there, but the long-term picture still looks constructive. Stick to the data, stay invested, own assets the benefit from policy drift, and don’t get shaken out by short-term panic.

Til next time.

Just a conversation to see if I can help with the problems, you need solving

Thanks for reading

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Mike 👋