Markets are sending mixed signals as global leadership begins to shift and inflation-sensitive assets quietly outperform. With hard and soft data pulling in different directions, investors are navigating a landscape that feels both familiar and uncertain.
Key Points:
- Markets Remain Volatile Amid Mixed Signals
Despite a short-term technical bounce, major indices like the S&P 500 and NASDAQ 100 remain below key moving averages. Markets are digesting backward-looking hard data (like Q1 earnings) alongside deteriorating soft data (confidence indicators), creating confusion. A retracement rally is underway, but confirmation of a true reversal remains unclear. - Structural Bull Market Intact, but Caution Warranted
The long-term structural bull market (in place since 2013) remains technically intact, with markets still above the rising 200-day moving average on a longer-term basis. However, near-term risks—particularly tariffs and seasonal weakness in May–June—are keeping positioning cautious. - Global Equities Show Stronger Breadth and Relative Strength
Outside North America, markets are outperforming. The MSCI All World ex-US Index is hitting new highs, and countries like Germany, Japan, India, and Spain are seeing over 60% of stocks in uptrends. Global equity leadership is emerging, and Barometer has increased exposure through its Global Fund and individual equity mandates. - Gold and Commodities Outperform; Tech and Real Estate Lag
Gold has rallied sharply, offering a strong inflation hedge, though it’s now overbought and may consolidate. Agricultural commodities and select industrial metals (like copper) are performing well. In contrast, technology—especially semiconductors—and real estate are under pressure from rising rates and weakening demand. - U.S. Dollar Weakness Signals Global Shift
The U.S. dollar is weakening against most major currencies (EUR, JPY, CAD, GBP, AUD), reversing a decade-long trend of strength. This reflects shifting global capital flows and supports the thesis that international equities and currencies may lead performance going forward. - Interest Rates and Inflation Continue to Pressure Bonds
Bond prices remain weak, with 30-year yields ticking higher. The bond market has been in a five-year bear market, and historical parallels (e.g., 1950s–1980s) suggest real returns could remain muted. Barometer maintains minimal fixed income exposure, favoring cash and inflation-sensitive equities. - Financials, Insurance, and Exchanges Lead Equity Positioning
Financials remain the firm’s largest sector weight. Insurance (Fairfax, Intact, Progressive) and exchanges (CME, TSX) continue to show strong relative strength. European financials, like Santander, are also being added amid signs of a new bull cycle in Eurozone banks. - Tactical Positioning: High Cash, Select Sector Exposure
Barometer raised cash earlier in the year and is redeploying gradually into areas with expanding breadth and leadership. Current sector overweights include financials, select industrials (GE Vernova, aerospace/defense), and precious metals. Underweights include technology, healthcare, and consumer discretionary. The focus remains on relative strength and sectors benefiting from global capital flows.