Markets continued to be fairly volatile in May, with traders very focused on the Trump administration's tariffs policy. That has made it difficult to predict outcomes for US stocks over the short to medium term. In fact, our rationale in May was to largely avoid US markets altogether.
There is a school of thought that argues the new administration needs to find the limits to its legal power - and foreign policy ambitions - before things will settle down again. Currently the sheer unpredictability of the White House means that the 2024 Mag 7 trade and Fed watching have gone out of fashion. Now fund managers worry about the US bond market.
For investors this is creating an opportunity in other markets including UK and European stocks, many of which still look incredibly undervalued.
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