My word, it’s hot

Once again, according to the headlines, we are close to a conclusion to the war. It’s almost like we are watching the popular TV game Deal or No Deal when it comes to negotiations with Iran. Recently, Trump has almost taken on the character of the Christmas panto villain. Prince Charming calls out, ” We are close to a deal, as Trump replies oh no, we are not. You can hear him shout to a chorus of boos from the investment community. As every day passes, a deal between the two becomes more prescient for both countries. Iran is running out of places to store its oil, and the rest of the world’s demands continue. I am surprised that the oil price is as low as it is in some ways. The price remains well below the levels reached, for example, during the early days of the Russia-Ukraine conflict.

I used to work in my early days as a jobber on the floor of the London Stock Exchange, the ones that stood against the hexagon, chalk pen and trading book in hand. One senior trader, who I think was a bear by nature, when there was strong demand for one of the shares he traded in, used to call out, “When the ducks quack feed them” You can get the gist of the quote. I remember him feeding the ducks one Christmas trading session; in the end, it cost us a small fortune. The ducks have been quacking this month for anything semiconductor-related, with the SOX index performing twice as strongly as the broader tech index. Dell up 40% in after-hours trading post earnings on AI demand, the latest example. That’s a lot of ducks.

We are approaching the halfway point of the year. Where do the days go? This coming month will focus on the meetings of the ECB, the Fed and the Bank of England, one following the other within 7 days. The other much-anticipated event will be the IPO of Elon Musk’s SpaceX, with an expected valuation of $2tn.

The one most likely to change policy is the ECB, with some talk of a 25-basis-point hike as Euro area annual inflation rose to 3.0% in April, up from 2.6% in March and well above the ECB’s 2% target. But with growth remaining lacklustre, it would surprise me.

As for the Fed, the new man, Mr Warsh, will be in charge for his first meeting, and it will be a tricky one after yesterday’s strong inflation print, with the monthly Personal Consumption Expenditures Index rising to 3.8% in April. Despite prices running nearly double the Fed’s target, unless Mr Warsh wants to be sent straight to the tower, the Trump tower that is, he will persuade his fellow committee members to hold their nerve. This meeting is one of the quarterly meetings that includes updated economic projections and the dot plot.

Finally, the Bank of England: I cannot see them raising interest rates, not with the recent better-than-expected inflation print and a mixed growth outlook. So it’s a no when expecting any changes in monetary policy from any of these three central banks.