Monthly Market Compass: May 2025
Uncertainty is the only certainty. Are equities in a dead cat bounce, or will tech repair the market as AI blossoms? All eyes on Trump, Trade wars, Tariffs, and long term Inflation.
Hello again, and welcome to our Monthly Market Compass for May 2025. We send these chart heavy market summaries at the beginning of each new month.
Please be aware that these notes are not investing advice and should be enjoyed as entertainment and for informational purposes only. Always do your own research. Sources can be found below each graphic.
As usual, we divide these monthly notes into several sections: Economy (currently focused on the potential for a Recession), Inflation, and Geopolitics+Commodities. A conclusion follows these sections. Enjoy!
Introduction and Market Observations:
Market Uncertainty is the focus and challenge of all market participants currently. The ongoing prospect for a prolonged trade war between the US and the rest of the global economy is wreaking havoc on investors and producers alike.
For starters, the VIX is at heights rarely seen over the past four decades:
Source: https://x.com/bravosresearch/status/1915440036574580798
Mid month in April Trump announced a 90 day hiatus on tariffs, though exempting China. Policy events continue to unfold in real time, which is much faster than markets are used to from the policy side.
Large US companies are left scratching their heads as they try to make plans under the new regime.
Even if a US based firm wanted to try to take advantage of the cheap energy and ongoing AI automation rollout in hopes of a coming productivity boom, that US based firm would have to navigate timeline decisions on tariffs that could easily be undermined in the near term by the gyrations of the new administration.
To return to the scene of ongoing events…
The size of the Global Debt market remains a problem:
Source: https://x.com/bravosresearch/status/1917594378446725323
The US share of that global debt is being refinanced at higher interest rates leading to an explosion in the US Interest Rate Expense:
Source: https://x.com/bravosresearch/status/1917643865978462521
Global investors look at this rising interest expense and worry that the US will have to print large amounts of US Dollars to pay off the previous debt it has incurred.
Turning to markets, US Equities have sold off a bit in the last few months, but have regained some ground in the last few weeks:
Source: https://www.tradingview.com/symbols/SPX/?timeframe=12M
Foreign investors look like they are taking a step back from US Corporate debt:
Source: https://x.com/Barchart/status/1914187039194636504
And the US Dollar has weakened along with that selling:
Source: https://www.marketwatch.com/investing/index/dxy
Gold has hit an all time high, and pulled back from that high:
Source: https://www.bullionvault.com/gold-price-chart.do
And Warren Buffet’s pile of US Treasuries continues to grow:
