Analyst Weekly, Might 19, 2025
World markets are flashing indicators that matter for the street forward, and savvy buyers are paying consideration. From AI enlargement into new areas to retail turning worthwhile and governments recalibrating commerce and taxes, the following section of the cycle is taking form. Right here’s what’s transferring markets and what it means on your portfolio.
Uncle Sam’s Not AAA Any Extra
Moody’s simply pulled the US’s ultimate AAA score, citing ballooning debt, a $2T+ annual deficit, and political gridlock over taxes and spending. However for a lot of out there, this was already priced in. The 27-year period of fiscal stimulus led to 2023 and internet curiosity funds have quietly climbed to 18% of tax revenues, far above historic norms. It’s clear that tariffs and paying for tax reduce extensions are indicators {that a} new interval of austerity has arrived.
The irony? Moody’s could be late to the social gathering. In 2011, S&P downgraded the U.S. after Congress handed $2T in cuts. Bond yields fell. Now, Moody’s is flagging deficits tied to tax reduce extensions that haven’t even handed whereas ignoring tariffs, which perform as a $2T consumption tax that truly helps income. Tariffs damage progress, however they assist the Treasury: a trade-off the market appears to grasp higher than the score businesses. Investor Takeaway: The downgrade displays what markets already know: we’re in a brand new fiscal regime outlined by austerity by way of tariffs and caps, not stimulus. Keep watch over Treasury yields and monetary negotiations however don’t overreact to the downgrade itself. Historical past reveals these calls typically lag the basics.
Britain’s Huge Beat, Meet Huge Breach
The UK kicked off 2025 with a bang: GDP rose 0.7% q/q in Q1, topping forecasts and main the G7. Sturdy shopper spending and industrial output did the heavy lifting, giving the federal government a story win. Whereas questions stay round recent tax will increase and commerce tensions, the expansion beat reveals the UK financial system nonetheless has momentum. In different phrases, Britain’s financial system is successful the dash, however the marathon has obstacles forward (commerce coverage being a key one).
In the meantime, a really 2025 drawback hit a British retail icon. Marks & Spencer (MKS.L) was sidelined by an enormous cyberattack that knocked out its web site and app for over three weeks. The ransomware-style assault left M&S unable to take on-line orders since late April, with some retailer cabinets even operating low as methods went offline. The retailer confirmed hackers stole sure buyer information (fortunately no fee information) and disruption has price it an estimated £30+ million in revenue thus far. M&S shares have tumbled about 14% for the reason that Easter weekend when the cyber woes started. The corporate is working to get operations again to regular, however the incident is a blunt reminder that even century-old manufacturers want cutting-edge cyber defenses. Investor Takeaway: A robust financial system doesn’t immunize firms from tech threats: buyers within the UK market should steadiness the encouraging massive image (strong GDP, bettering sentiment) with due diligence on company-specific vulnerabilities (like cybersecurity resilience). Keep watch over commerce coverage strikes too, as any post-truce tariff flare-up may shortly flip Britain’s shock increase right into a bust.
Supply: Bloomberg, As of Might 18, 2025.
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Copper: Electrified, Scarce, and (Barely) Tariffed
Copper simply acquired hotter. Structurally, demand is being supercharged by every part from EVs and photo voltaic panels to AI information facilities (sure, servers want critical energy). China, which buys over half the world’s copper, has rolled out infrastructure-heavy stimulus for 2025, including extra gas to the fireplace. However provide? That’s the place it will get tight. Chile and Peru (which mine 40% of worldwide copper) are battling falling ore high quality, political disruptions, and water shortages – a mixture that’s slowing down manufacturing simply as demand ramps.
Then got here a curveball: the US is probably (not but imposed) implementing a 25% tariff on copper imports, spooking merchants and briefly flooding inventories, which despatched costs tumbling. A 90-day truce with China has helped stabilize sentiment, however the market’s nonetheless edgy. Investor Takeaway: For buyers, the setup stays advanced: structurally bullish, however tactically risky. UK-based publicity ranges from direct copper exposures like WisdomTree Copper, to diversified miners (ANTO.L, GLEN.L, RIO.L) and broader pure sources funds (BRWM). Every brings completely different sensitivities to copper worth shifts and to the coverage dangers now baked into the commerce.
Supply: Bloomberg, information as of Might 18, 2025.
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