The May survey is unusual in that it was conducted between May 2 and 8, before the announcement of the US-China summit in Geneva for 75% of respondents, and after the announcement for the remaining 25%. Nevertheless, the survey shows that financiers were already less inclined to hang themselves than in April. Translation: they had already started betting on a trade de-escalation even before the Swiss weekend meeting between Chinese and US representatives.

The survey shows that managers anticipated an average tariff rate on Chinese products of around 37% after the initial negotiations. The actual figure ended up being 30%. Not as bad as expected, i.e. better. The result: a slight boost to the markets at the beginning of the week. And since the relaxation came quickly, the bullish momentum didn't even have time to falter.

Amongst the data available to our limited minds, three points are worth noting:

  • US deficit: lost illusions.

75% of professionals believe that tax cuts will further increase the US deficit. Few believe that growth will offset the bill. This skepticism could soon be reflected in expectations for US debt. And given the difficulty of rates to fall, this may already be the case.

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  • Everyone wanted gold

For the second month in a row, the most crowded marketplace was buying gold. The barbarous relic dethroned tech, whose "Magnificent Seven" had held the top spot for two years. It remains to be seen how long this will last: the yellow metal lost 5% in a week as FOMO struck back.

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  • Pharma, still heavily weighted

Fund managers were still heavily positioned in pharma at the beginning of May, although they have started to reduce their positions. They could be in for some nasty surprises, given the sector's difficult run since Donald Trump chose it as his punching bag - instead of Jerome Powell. The big contrarian leveraged bets at the beginning of the month were to buy energy and discretionary consumption... two winning trades 15 days later!

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