Investment paralysis, the hot potato and US driving season

Stephen Innes SPI Asset Management

t's a tough time to manage money – and performance is struggling across the board. Perhaps worse, asset managers don't know what direction to turn next.

The backdrop is challenging, and "The Street" is coming to terms with the harsh reality of central banks tightening monetary policy. For the most part, every pain trade that could have occurred in the market has broadly occurred. But there is likely more turbulence, air pockets, and higher volatility to navigate.

Still, when asset managers are puzzled about the next direction, it creates " investment paralysis." Then the market becomes little more than a hot potato for investors as they figure out what to do today.

But let us be realistic without complicating matters; the outcome is binary. If we skirt a recession, the S & P 500 moves back to 4500; if not, we fall to 3000. From here on out, growth data will carry the baton

Oil

Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak US driving season. Refineries are typically in ramp-up mode to feed US drivers unquenching thirst at the pump.

A weaker USD contributed to the latest price rebound and was further supported by a more significant rate cut than expected in China.

Reports emerged that US President Joe Biden is considering meeting with Saudi Arabia Crown Prince Mohammed bin Salman next month in what could be an important meeting for the oil market. So perhaps the top side could be limited until Traders iron out this news.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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