Noticias del mercado & perspectivas

It's well-known that many discretionary traders struggle with discipline, emotional control, and other psychological hurdles that can impact their decision-making process, particularly when it comes to entering and exiting trades. One of the widely recognized benefits of automated trading models, however, is the belief that these psychological barriers are removed or significantly reduced. Automation, after all, is designed to eliminate human emotion from trading decisions.

However, the assumption that psychological challenges vanish with automated trading is far from reality. As you delve into the exciting world of creating and trading “Expert Advisors” (EAs), it is crucial to understand that psychological challenges still exist, albeit in a different form. You must be prepared to face various mindset issues during the EA development and trading process.

This article outlines and aims to inform on nine key potential psychological challenges traders might encounter when working with EAs and offers guidance on how to navigate them effectively. Use this checklist to develop an awareness of potential issues and take meaningful action to enhance your trading performance. 1. Over-Optimization and Curve Fitting One of the most common challenges traders face when developing EAs is the temptation to over-optimize their algorithms.

This refers to tweaking the EA to perform perfectly in historical backtests but at the expense of real-world effectiveness. While an over-optimized EA may show stellar performance on past data, it often falters when faced with live market conditions, leading to frustration and self-doubt. To mitigate this, it is vital to stay focused on each stage of the EA creation process and avoid the trap of endless refinement.

Always keep in mind two fundamental principles: The purpose of an EA is to reliably generate profits. Once this is achieved, the next step is simply scaling the strategy. The purpose of backtesting is not just to validate that the settings work but to justify moving to a forward test. 2.

Fear of Loss Fear and anxiety can emerge when transitioning from testing to live trading, especially when real money is involved. Traders may worry about losing their capital or encountering a significant drawdown that tests their emotional resilience. This fear can act as a barrier, preventing traders from taking their EAs live or increasing trade sizes, even when results suggest it is the right time to scale up.

Developing confidence in your EA through thorough backtesting and forward testing is key to overcoming this fear. 3. Lack of Control Another psychological hurdle is the feeling of losing control when relying on an automated system. With discretionary trading, traders are actively involved in every decision, whereas, with an EA, the algorithm executes trades without human intervention.

This can lead to feelings of helplessness, especially if the EA doesn’t perform as expected. Watching trades unfold on your account without direct involvement can be unnerving, tempting traders to interfere prematurely. Resisting the urge to manually override the EA is crucial.

Trust the system you’ve created, as long as it is backed by solid logic and testing. 4. Confirmation Bias Traders may fall into the trap of confirmation bias, where they only acknowledge the positive aspects of their EA’s performance while overlooking warning signs or evidence of flaws. This bias can be dangerous, as it blinds traders to potential weaknesses that may lead to significant losses over time.

Creating a set of objective performance measures, such as maximum drawdowns and key profit metrics, can help maintain a clear and rational perspective on the EA’s success. Emotional attachment to an EA that has taken considerable effort to build can cloud judgment, so it’s important to remain objective, especially when difficult decisions arise. 5. Overconfidence Success with one or more EAs can lead to overconfidence, which is a major psychological pitfall.

Traders may begin to overlook necessary refinements, substitutions, or additional testing. Early successes might lead them to believe they can expedite the process of moving an EA to live trading and scaling it, without taking the time to gather sufficient data from a large enough sample of trades. Patience is essential when transitioning to live trading.

Ensure that a critical mass of data is available before making decisions about scaling or altering your approach. 6. Impatience Many traders expect immediate results from their EAs, which can lead to impatience. This impatience often results in premature modifications or abandonment of strategies that could have been profitable over a longer time horizon.

There are no shortcuts in trading. Allow time for your EA to demonstrate its potential over a defined period, rather than making snap judgments based on short-term performance. Regularly comparing live results to backtests over a reasonable timeframe can provide the necessary context to assess whether an EA is working as intended. 7.

Adaptability Market conditions change, and EAs that perform well in one environment may struggle in another. The psychological challenge here lies in being open to the necessity of adaptation. Some traders may hesitate to make changes or replace an EA, fearing the effort it took to develop the original model.

Consistent monitoring and having clear criteria for when adjustments are needed are vital to long-term success. Embrace the process of refinement, knowing that adaptability is essential for keeping your EA portfolio profitable in different market conditions. 8. Social Comparison Comparing your EA’s performance to others can lead to feelings of inadequacy, envy, or frustration, especially if you perceive that your system isn’t performing as well as someone else’s.

Social comparison is common among traders, but it can lead to unnecessary emotional strain unless checked. It’s important to remember that traders are often more vocal about their successes than their losses. Maintain a focus on your own progress and the unique journey of developing a system that works for you. 9.

Emotional Resilience The ability to stay emotionally resilient during drawdowns or periods of underperformance is critical. Fear, anger, frustration, and impatience can cloud your judgment and negatively impact decision-making, including premature withdrawal of an EA. With any strategy there will be periods of under and over performance.

Accepting this is critical for good long-term decision making. Obviously, time is a great “calmer” in terms of developing not only confidence but also this acceptance. Anecdotally, new automated trades are most at risk until there is a “record of achievement”.

This is one of the key reasons why trading any new EA at minimum volume as you discover how it performs under live market conditions is vital. In Summary Addressing these psychological challenges is essential for success in the world of automated trading. Taking these points on board and stepping back to review where you are as many of these may creep in insidiously over time would seem prudent.

Practical steps you can take may include: Developing a deep understanding of your EA’s logic and parameters, so you trust the system you’ve built. Setting clear performance expectations and avoiding comparisons with others. Developing self-awareness and emotional regulation to stay calm during turbulent times.

Regularly reviewing and updating their trading strategy on which the EA is based, including sighting charts of trades taken and refinement of risk management strategies are always worthwhile. Consistent monitoring is vital. Taking breaks to avoid burnout and maintaining a healthy work-life balance.

Trading EAs do create an interesting set of challenges but as stated previously, awareness that these challenges may exist is the first step to be able to take meaningful action and continue the work on yourself. Whether you ae a discretionary or automated trader, this rule is unquestionable and always the start point of long term improvement in trading decision making. If you are interested in the GO Markets automated trading platform and strategy tester, and the education we can provide relating to this topic, please feel free to connect at [email protected] at any time.

Since writing our Thematic paper for 2025 two of the four major themes have already shook markets in 2025. One has been the inauguration of Donald Trump as president of the United States of America and he nationalistic policies the second is the AI revolution taking a massive left hand turn. With the release of DeepSeek, the AI story may actually become the biggest theme of the year (big call considering it's still January).

We also need to rethink demand and the flow of funds in the wake of DeepSeek R1 disruption. Because if open-source DeepSeek R1 model does deliver performance comparable to OpenAI’s o1 reasoning model at a fraction of the cost (VentureBeat, Jan 20), it raises critical questions for not just AI, but periphery players in the AI chains as well. Here’s why: DeepSeek R1 is reshaping investor perceptions of the AI compute investment cycle.

Reports suggest that the model achieved competitive performance using significantly fewer computing resources and lower inference costs. These efficiency gains have cast doubts on the future scale of AI semiconductor and equipment investments, leading to selloffs across semiconductor stocks. Look at NVIDIA, Meta and closer to home NextDC and the like.

We also know that in China, DeepSeek v3 has already driven AI compute cost deflation. The R1 model leverages advanced techniques like multi-head latent attention (MLA) and mixture of experts (MOE), enabling more efficient training by breaking workloads into smaller parts. This is something o1 has only just begun doing – but at a higher cost load.

While these innovations may not apply universally to all models, they signal a shift that could impact global AI training strategies. Now the caveat the tech boffins point out here is that the greater training efficiency is unlikely to reduce overall compute spending in the near term, as improvements typically fuel more inference demand. But and it is a but, economies of scale always come home to roost in the end.

The consumer will benefit – the investor needs to get picky – who is going to lead and who is going to fall by the wayside? Lets look at the Tech Gorillas like Amazon, Google, and Meta, DeepSeek R1’s efficiencies create a mixed outlook. While these firms develop proprietary models it's important to remember that they also monetise AI services through platforms like Amazon Bedrock and Google Vertex.

Lower training costs could reduce operating and capital expenditures, boosting profitability. Amazon benefits from its partnerships with external developers. Google, meanwhile, leverages its Gemini model for growth.

Meta appears best positioned, as its Llama model generates minimal direct revenue, while its announcement of a 54%-66% year on year increase in capex to $60-$65 billion in 2025 demonstrates its commitment to scaling AI capabilities. This follows news of the Stargate project, which is estimated to add $100 billion in incremental cloud-related capex. These moves underscore that demand for high-performance data centres remains robust, even as cost-efficient AI models emerge.

So what about the hardware developers like NVIDIA (NVDA), Broadcom (AVGO), and Marvell (MRVL) that have been savaged by DeepSeek’s cost efficiencies? While concerns about reduced training investment persist, long-term demand for AI compute remains robust and one player will not be enough to change that. Training requirements, particularly for inference workloads, are expected to drive growth over the next 2-3 years and no model as yet can do that without increased hardware.

The question will be margins – will hardware margins get squeezed from cost efficiencies? Then there is the memory sector, DRAM demand remains steady despite short-term pressures. TSMC, a critical player in AI accelerators, has also faced declines but remains integral to the semiconductor supply chain.

So, no real change here from DeepSeek. Where does this all leave us? The emergence of cost-efficient AI models like DeepSeek R1 introduces both opportunities and risks.

Yes, declining compute costs have mixed implications for the tech sector. On one hand, they alleviate margin pressures for software companies grappling with expensive AI features, potentially accelerating AI integration across product lines. But the risk to this is, lower barriers to entry could intensify competition from agile AI startups, challenging incumbents.

In short these innovations could reshape AI economics, the sustained demand for robust infrastructure, driven by broader AI adoption and multi-cloud trends are likely to overawe the negatives for a positive long-term outlook. Thus investors should focus on companies well-positioned to benefit from these shifts while remaining cautious of near-term volatility.

Achieving long-term success in trading requires more than just knowledge and technical skills. It depends on building a foundation of mindset, behaviours, and self-awareness. This foundation is built on three critical drivers: Trading Confidence and Reliability, Trading Self-Relevance, and Trading Locus of Control.

These drivers work together to create a framework for sustainable growth and success in the market. However, failing to implement these drivers can lead to frustration, inconsistency, stagnation, and trading outcomes that fall short of what may be possible for you. In this article we explore these drivers in detail, enriched with definitions, examples, and insights into the consequences of neglecting them. 1.

Trading Confidence and Discipline Definition: Confidence is the belief in your ability to succeed and overcome challenges, while reliability is about creating consistent, dependable outcomes through your actions and systems. Confidence is the psychological pillar that allows traders to operate with clarity and conviction, even in volatile markets. This IS the KEY ISSUE in trading discipline.

Confident traders invariably are disciplined traders. This attribute needs work, being cultivated through deliberate practice and the accumulation of small wins over time. Core Concepts: Confidence in Your Ability to Take Action: What it means: This is about trusting in your capability to take the necessary steps, no matter how small or challenging, to achieve positive outcomes.

It requires the ability to see yourself as an active participant in your success, rather than a passive observer. This confidence grows through persistence and a willingness to learn from setbacks. You need to believe that even if you don’t have all the answers today, you are equipped to figure things out over time.

Example: A trader analyses their losses to identify mistakes and refine their approach, developing resilience to re-enter the market with improved strategies. Consequences of Neglect: Without confidence, traders may hesitate to take action or abandon trades prematurely, missing out on potential gains and learning opportunities. Confidence in the Importance of Taking Action and then Testing: What it means: Recognizing the value of consistent effort and the power of experimentation is essential in trading.

Small, deliberate actions, such as testing new strategies or refining old ones, provide insights that build trust in your systems. Testing allows you to bridge the gap between theory and application, proving to yourself that what you do matters and can lead to improved results. Example: A trader refines a new risk management rule on a demo account, building trust in its reliability.

Consequences of Neglect: Neglecting testing can lead to impulsive decisions based on unverified strategies, increasing the likelihood of inconsistent or poor outcomes. Confidence in Your Trading Systems: What it means: Believing in your system means trusting the process you’ve developed, knowing it has been built on solid foundations, and understanding that, over time, it is capable of delivering reliable results. This confidence doesn’t mean blind faith—it’s about the discipline to stick to your system because you’ve put in the work to validate it.

Example: A trader follows a trend-following system backed by thorough back testing and evidence in live markets of positive outcomes. Consequences of Neglect: Without trust in your system, you may second-guess trades, frequently change strategies, or fail to commit to a plan, resulting in erratic performance. The link between this and the ability to be disciplined is undeniable.

Believing in the Impact of Learning and Action: What it means: Understanding that your effort to grow and take deliberate action is the engine that drives success. This belief empowers you to view setbacks as opportunities for growth, rather than roadblocks. It shifts your focus from outcomes solely to recognising the important processes, enabling you to learn and improve continually.

Example: A trader uses mindfulness techniques to reduce emotional errors, significantly improving decision-making. Consequences of Neglect: Failing to learn from mistakes or take deliberate action can result in repeated errors and a lack of meaningful progress. Key Takeaway: Confidence and, subsequently, discipline are essential for building consistency.

Without them, traders are likely to operate reactively, undermining their potential for long-term success. 2. Trading Self-Relevance Definition: Trading self-relevance is the alignment of your trading activities with your values, goals, and purpose. It ensures that trading is not just an activity, but a meaningful pursuit tied to your identity and aspirations.

Core Concepts: Purpose: What it means: Having a clear “why” behind your trading journey is about understanding the deeper motivation that drives your actions. Purpose provides the emotional anchor that keeps you steady, even when the market becomes unpredictable. It transforms trading from a task into a mission, connecting it to something personally significant.

Example: A trader pursuing financial independence views trading as a means to an end, which keeps them motivated. Consequences of Neglect: Without a strong purpose, trading can feel aimless, leading to a lack of discipline, motivation, and ultimately, poor results. Level of Importance: What it means: Treating trading as a priority requires committing the time, energy, and focus necessary for improvement.

It involves recognizing the importance of consistent effort and giving trading the same respect as any other profession or life goal. Example: A trader allocates specific hours for market analysis, reflecting their commitment. Consequences of Neglect: Treating trading as a low priority can lead to inconsistent effort, incomplete preparation, and missed opportunities.

Developmental Evidence: What it means: Monitoring your progress and recognizing improvement is key to maintaining motivation. Evidence of growth reinforces that your actions are effective, encouraging you to stay the course. It creates a feedback loop where success builds confidence and confidence drives further effort.

Example: A trader reviews their journal weekly to identify profitable patterns. Consequences of Neglect: Without tracking progress, traders may lose confidence, fail to learn from their experiences, and struggle to refine their approach. Key Takeaway: Self-relevance connects your trading to your identity and goals.

Neglecting this alignment can lead to a lack of direction and reduced motivation to improve. 3. Trading Locus of Control Definition: Locus of control refers to your belief about whether outcomes are determined by your own actions (internal) or by external factors (external). Core Concepts: Internal Locus of Control (ILOC): What it means: Believing that your outcomes are shaped by your decisions, behaviours, and preparation.

This mindset puts you in the driver’s seat, enabling you to take responsibility for your actions and their consequences. It empowers you to adapt, improve, and proactively address challenges. Example: A trader reviews losses to identify mistakes and improve, rather than blaming external factors.

Consequences of Neglect: Without an ILOC, traders may externalize blame, failing to take responsibility for their growth and repeating the same mistakes. External Locus of Control (ELOC): What it means: Attributing outcomes to luck, market conditions, or other external influences. This mindset often leads to feelings of helplessness, as you perceive success as being outside of your control.

Example: A trader blames sudden news events for losses without analysing their own decisions. Consequences of Neglect: An ELOC mindset often results in a lack of accountability, leaving traders feeling powerless and unmotivated. Take charge of what you can control!

Here are the actionable aspects within your control to make sure that your locus of control remains primarily internal: What You Learn: Continuously improving knowledge through deliberate effort. Your Systems: Refining strategies with evidence and adapting to market changes. Your Trading Time: Managing when and how much you trade.

Performance Measurement: Evaluating progress using clear metrics. Execution: Maintaining discipline in trade management. Permission Not to Trade: Knowing when to step back.

Consequences of Neglect: Failing to focus on what you can control leads to frustration, emotional decisions, and a reactive mindset. Key Takeaway: An internal locus of control empowers you to take responsibility for your outcomes, fostering resilience and proactive growth. Summary - Bringing It All Together Ultimately, these three drivers— Trading Confidence and Reliability, Trading Self-Relevance, and Trading Locus of Control —must work in harmony to achieve lasting success.

They create a foundation for continuous growth, adaptability, and resilience. Neglecting these principles often results in frustration, stagnation, and missed opportunities. By adopting these drivers, you align your trading journey with a mindset built for success.

One of the biggest indicators confounding markets, economists, and commentators over the past six months in particular, is the strength of the employment market. Not only are they stable, they are moving at rates outside historical ten year norms. Just have a look at Australia at the moment, unemployment at 4% averaging 35 to 40,000 jobs per month and participation in the employment market at or near record all-time highs.

This is not just an Australia story, have a look at the US where the non-farm payroll figures continue to run ahead of our expectations and forecasts. Yes it is eased from its peak in 2023/2024 but overall The US employment market is really solid. This is despite the fact that the cost of living crisis is entering its 28th month and according to all media factions is still ‘ending the world’.

The thing is - employment stability produces stronger than anticipated consumer spending. And we believe that this is what's being missed by traders and investors alike as the stability has directly supported stronger-than-anticipated consumer spending. Which in turn for western developed markets underscores why there has been resilience of the economy.

That's not to say a slowdown in economic growth is off the cards, more that the trajectory looks less steep and more delayed than previously forecasted. Retail sales data for December showed a solid 0.7% month-on-month (MoM) increase. Which suggests real consumption growth for the final quarter of 2024 was a year on year (YoY) 3%.

As long as the labour market remains resilient and equity prices avoid a sharp downturn, consumer spending should continue to hold up. Caveat is US savings rates, they are now at the lowest level in over 6 years so expect spending growth to moderate in the coming months. Something that was seen in 23/24 was weaker retail sales in Q1 of last year after a bumper December print - could repeat in 2025 following the strong December retail performance?

But you are probably thinking “who cares” what does this mean for my trades and what does this mean for my positioning? Well as explained in last week’s 5 thematics of 2025 - nationalism versus global trade supply is one area we need to look at. Because it will feed directly into the theme that has been going on now for 18 months which is the consumer price conundrum.

Why this matters markets have put so much money behind the rate cut trade impacts both positively and negatively to inflation will still be one of the biggest impactors to your trades. So looking to the US let's break down the December CPI data – there was a modest 0.23% MoM increase, for a YoY rate of 2.7%. Aligning with the 0.17% MoM rise in core Personal Consumption Expenditures (PCE), which and a YoY rate of 2.1%.

This effectively confirms the Fed’s inflation target has been hit. Think about that for one moment and the initial reactions in the market to start 2025. It was rift with bets that the Fed could be done, and that inflation would remain stubbornly high.

There is justification for this idea and more on that below. The December CPI suggests US core inflation to trend down to about 2% by mid-year. Secondly the trend is there as well - three-month core inflation has slowed to 2.2%, and six-month core inflation has eased to 2.3%.

These figures point to a clear and sustained moderation in price pressures. Going deeper – the biggest factor that is likely to drive US inflation lower is signs shelter costs have peaked and are beginning to ease. Owner’s Equivalent Rent rose just 0.23% in November and 0.31% in December.

These increases are much slower than the 0.4-0.5% monthly jumps seen in late 2023 and are more in line with pre-pandemic norms. Of course, there are caveats to this narrative. Residual seasonality in the data could skew the inflation readings.

For example, in both 2023 and 2024, softer inflation in the latter half of the year was followed by a sharp 0.5% MoM spike in core PCE inflation in January. But – if the November December trend in PCE inflation was to continue in February and March it would reinforce confidence among both the Fed and markets that inflation is on a sustainable path back to the central bank’s 2% target – and that should equal more rate cuts in the Federal Funds Rate. All things being equal - by the time the Federal Open Market Committee (FOMC) meets in May, there would likely be enough evidence to justify this move, especially to prevent real policy rates from rising unintentionally as nominal rates hold steady.

However – there are input costs coming from the newly installed Trump administration. Changes to immigration policy is likely to drive up wage and input cost on sectors such as agriculture and personal services. Then there are possible tariffs and other trade sanction issues that will also impact global supply and ultimately price.

If we look at the chatter from Fed officials, opinions vary on the implications of broader policy shifts. Hawkish members of the Fed expect these policies to exert upward pressure on inflation, while dovish officials, argue that any price increases stemming from these factors would likely be temporary and wouldn’t necessitate a monetary policy response. Either way – they are unknown knowns, and explains the flow of funds to the USD, CHF and gold.

It also probably explains further excitement in crypto. So – who is right and who is wrong? If we take the movement in the USD and bond markets as ‘right’ – inflation is going to move higher from here and the Fed is done.

Traders only now have moved from possible rate hike(s) – (yes higher) to a mild chance of a single rate cut in 2025. The Fed’s December dot plots – only has 50 basis points – so two cuts, which is not huge and explains the shifts. On the counter – if the current market trend is wrong we need to look at the economist forecast.

Most have 3 rate cuts in 2025 some have as much as 5 (so 125 basis points). If that was to be the case the speed and change in positioning will be rapid and the strength in the USD would need to be evaluated. That scenario, if it eventuates, would likely begin in May, there is plenty of time to reposition.

But risks remain, particularly around seasonality and policy uncertainties. In the interim, watch for fiscal policy around nationalism then look for changes in inflation and labour that lead to monetary policy changes in the coming months to maintain balance in the economy.

As Donald Trump prepares to take office on January 20th, the world watches with a mix of anticipation and apprehension with what may lie ahead, not only domestically but for the world as a whole. The first 100 days of any presidency set the tone for an administration's priorities and policies. Historically, this period has been viewed as crucial for the pace of implementing campaign promises and establishing a leadership style both internally within the party and the country.

What makes Trump’s first 100 days particularly significant is the potential for sweeping changes in domestic and foreign policy, with implications that extend beyond the United States. Analysts are already debating the impact these policies could have, not just on the American economy but also on global trade, geopolitics, and financial markets. From proposed tariffs to energy policy shifts, the decisions made in this critical period could ripple across multiple asset classes and redefine US international policy and relations.

This article aims to unpick what may (and may not) happen, in this crucial first 100 days. Control of the House and Senate The balance of power in Congress will play a crucial role in determining the success of Trump’s agenda and the “clean sweep”” of control is on the surface beneficial. Republicans gained a three-seat majority in the U.S.

Senate and maintained their control of the U.S. House of Representatives, in addition to gaining control of the White House. The Republican-controlled House and Senate will make it easier for Trump to pass legislation aligned with his campaign promises, including tax cuts, deregulation, and immigration reforms.

The unified government could streamline the legislative process and reduce gridlock. Although this level of control also places greater accountability on the administration and its party, leaving little room to blame opposition for policy failures it seems unlikely at this stage that this may deter what appears to be a very resolute Trump. Although internal divisions within the Republican Party could theoretically create obstacles, r the somewhat controversial make up of his hand-picked and loyal cabinet, and a historical record of removing dissenters, may mean any implications of this may not be felt until the end of the Trump term, and a clear path to essentially put in place much of what has been discussed seems likely.

Key Promises and Realities Campaign promises often comprise a series of bold statements of intent designed to attract voters as their primary function. Trump’s pre-election rhetoric emphasised economic nationalism with a continuation of the “America First” narrative, with a focus on reshaping trade agreements, boosting American manufacturing, and rolling back regulations. While these promises undoubtedly energised his voter base, they also may face significant hurdles, including Congressional approval, legal challenges, and resistance from key stakeholders.

History has shown that many presidents struggle to deliver on their most ambitious promises during the early months of their tenure. For Trump, the challenge lies in navigating a polarized political landscape and reconciling his campaign’s populist agenda with the complexities of governance. Nevertheless, the policies he prioritises in his first 100 days could provide a glimpse into how much his long-term vision and strategic direction may be in reality and what may be a very different looking Republican party and country as a whole.

In this article we will focus on the impact of tariffs, including the potential on various asset classes, a brief outline of energy policy and reference to immigration, technology and infrastructure and environmental regulation. These appeared on the surface to be the ‘five main drivers of the election campaign and so are likely to be part of this first 100 days to varying degrees. 1. Tariffs and Trade Relations One of the most contentious aspects of Trump’s campaign was his pledge to impose tariffs on imports, particularly from countries like China and Mexico and even threats towards the EU and near neighbours Canada.

The scale and scope of these tariffs remain uncertain, but their implications may be far-reaching. a) US Inflation: Tariffs on imported goods could lead to higher prices for US consumers as costs will be passed on from importer to customer. This, dependent on the extent of such, is generally accepted by most leading economists to potentially fuel an already stubborn but recovering inflation. Indeed, this has been recognised by the US central bank with reference made to this potential in this week’s last FOMC minutes.

With a rate cut pause expected for 2025 to at least March and potential even May, there is no doubt that Trump's impending presidency is playing into Federal Reserve thinking already, Whilst this approach is designed to impact and provide motivation and benefit domestic producers in the short term, there is a general acceptance that it may be high risk Another prolonged period of higher than desired inflation and so interest rates remaining relatively high are likely to have implications on US growth. b) Global Trade Relations: Tariffs often invite retaliatory measures, risking a trade war that could destabilise global markets. Countries targeted by these policies may respond with their own restrictions, disrupting supply chains and reducing international trade volumes. The financial markets are likely to react swiftly to any announcements regarding tariffs.

Equities in export-dependent industries could see volatility, while currency markets may reflect shifts in trade dynamics. For example, a protectionist stance could strengthen the dollar in the short term but weaken it if trade tensions escalate. c) Asset Class Implications The policy changes introduced during Trump’s first 100 days are expected to influence multiple asset classes: Equities: Certain sectors, such as defence, infrastructure, and energy, may benefit from increased government spending and deregulation in these areas. Conversely, industries reliant on global supply chains or international markets could face headwinds.

Supply concerns due to higher prices created by the addition of tariffs may impact on manufacturing companies profit margins if they are to remain competitive. Bonds: Inflationary pressures from tariffs could push bond yields higher, as investors anticipate tighter monetary policy from the Federal Reserve. This has already been evident over the last few weeks with the 10-year treasuries hit 9-month highs, Commodities: Energy markets, in particular, are likely to be impacted by changes in regulation and geopolitical tensions.

Policies favouring fossil fuels could support oil and gas prices, while a diminished focus on renewables may shift investment patterns. Oil moved higher and is already testing 6-month highs this week. Despite USD strength (see below) We are seeing Gold holding high levels and testing 2700 this week, as investors look for an inflation hedge perhaps.

Currencies: The US dollar’s trajectory will depend on the interplay between trade policies, fiscal measures, and geopolitical developments. A stronger dollar could hurt emerging markets, while prolonged uncertainty might weaken investor confidence. The USD has surged to reach 26-month highs this week on the back of reduced 2025 rate cut expectations and subsequent high bond yields.

Cryptocurrencies: The volatility of traditional markets may drive increased interest in cryptocurrencies, as investors look for alternative assets to hedge against inflation and geopolitical risks. Proposed regulatory changes cited during Trump’s presidential campaign have already been bullish for Bitcoin, seeing a surge since the election and testing the key $100K level. 2. Energy Policy and Geopolitics Energy policy is another area where Trump’s administration is expected to make significant changes.

His campaign emphasised support for fossil fuels (though obviously this may have been driven to some degree by the support for election funding) whilst expressing scepticism towards the concept of global warming and so renewable energy initiatives. These shifts could have profound implications for both domestic and international energy markets. Domestic Impact: Deregulation of the energy sector may boost production and create jobs, particularly in traditional energy industries.

However, this approach could also face opposition from environmental groups and states prioritizing green energy. International Relations: Energy policy decisions will influence the geopolitical landscape. For instance, increased US oil production could reduce dependence on imports and alter relationships with major oil-exporting nations.

Simultaneously, a rollback of climate commitments might strain alliances with countries advocating for global environmental initiatives. The broader geopolitical implications of Trump’s policies extend beyond energy. His administration’s approach to issues such as NATO funding, relations with China and Russia, Middle East and Russia/Ukraine conflicts will shape the international order in the years to come. 3.

Immigration and Deportation Immigration was a cornerstone of Trump’s campaign, with promises to tighten border security and increase deportations of undocumented immigrants. These policies could have wide-ranging implications: Economic Impact: Deportations could reduce the availability of the labour force in certain industries, potentially driving up costs and affecting productivity. Stricter immigration policies may also deter highly skilled workers from entering the US, impacting innovation and competitiveness.

Social and Political Implications: Increased deportations and stricter immigration enforcement could exacerbate social tensions and face legal challenges from advocacy groups. States with significant immigrant populations might resist federal mandates, leading to conflicts over jurisdiction and enforcement. Internationally, Trump’s immigration policies could strain relationships with neighbouring countries, particularly Mexico, and affect trade and diplomatic cooperation. 4.Environmental Regulation One additional area likely to see significant activity is environmental regulation.

Trump’s administration has signaled a desire to roll back many of the Obama-era environmental protections, citing their burden on businesses and economic growth. Impact on Businesses: Loosening regulations could benefit industries such as mining, energy, and manufacturing, which have long pushed for reduced compliance costs. Global Implications: However, these rollbacks could lead to criticism from international partners and advocacy groups, particularly as climate change remains a global priority.

The US’s retreat from environmental leadership might influence global efforts to combat climate change. 5. Technological and Infrastructure Initiatives There are questions on the importance of general infrastructure development as a priority despite the recognition to invest in transportation, energy grids, and logistics expansion, Such initiatives may be very specific and limited in the early days of the next Trump presidency. I nfrastructure Spending: A large-scale infrastructure bill could stimulate job creation and economic growth, though funding mechanisms (e.g., debt or taxation) will be a critical point of contention and contrary to much of the pre-election narrative.

At this stage, such spending may be limited to later in the presidential term and big spending may be limited by initiatives that aim to bring down national debt levels. Technology Integration: The AI story is not going away, and the US seems keen to be seen as leaders. As well as the import/export restrictions that may be imposed to make sure the US is ahead of the game are one of the stated goals of the Trump administration.

It would not be surprising to see this area as part of early policy decisions that put the things in place to facilitate such technological advances not only now but going forward. Summary The first 100 days of Trump’s presidency will be a critical period, offering insights into his administration’s priorities and policy direction. While many campaign promises may prove difficult to implement, the initiatives that do materialize are likely to have profound implications for the US economy, financial markets, and global relations.

Investors, businesses, and policymakers must remain vigilant as the administration’s agenda unfolds. Key areas to monitor include trade relations, energy policies, immigration, and the broader geopolitical landscape. The potential for environmental regulation rollbacks and reduced infrastructure investments further adds layers of complexity.

As uncertainty looms which is part of any:frost 100 days: scenario, understanding and preparing for, the potential risks and opportunities will be essential for navigating this new Trump era and its potentially far-reaching consequences.

Welcome to 2025, a year that will be shaped by macro thematic events that were put in place at the end of 2024. Why we need to prioritise thematic analysis is that if we look at 2023 and 2024 indices and FX markets that were tied to the thematics of those two years outperformed peers and similar tools. Considering the S&P 500 returned a whopping 25 percent in 2024, starting the new year around the event that will shape the trading world is prudent.

So what will be the big thematics of 2025? Here are the five themes shaping the year ahead, each refined to align with evolving market dynamics: 1. The nationalisation of globalism Tricky title yes, but we are going to see a return to nationalistic policies from all walks of government.

This theme is likely to make a strong return in 2025 after pausing from about mid 2023. It will be driven by shifting global trade particularly the US and China and policy priorities of populist governments that are popping up all over the world. The push pull of nationalism versus globalism has rapidly swung back to nationalism since COVID.

Policymakers are consistently banging the drum that reducing reliance on globalised supply chains in favour of localised production and economic security. Just take a look at the policy ‘Future made in Australia’. This is a policy that is picking winners directly targeting manufacturing and a technology space that is already saturated with global supply.

The question we as traders and investors have to ask is will national policy supporting inefficient industry win out over global supply into the future? Theory would suggest not investment however follows the money and governments are piling money in. Again that's not to say it's right, it's just the flow.

With the return of a Trump administration to the White House not only is nationalistic policies going to be front and centre for investment tariffs and trade impacts will also be a major theme for 2025 and beyond. The playbook here is to review Trump 1.0 and look at the impacts on trade from 2017 to 2020. More on that below.

What is clear is the current populist shift to nationalism in global supply chains marks the biggest swing in trade systems since the 1960s. What we need to realise as investors is which multinationals and trading firms can adjust to the new reality and which will face the challenges that they are unable to survive. Identifying these changes will be key to investing going forward. 2.

China sandbagging One of the fastest developing thematics of 2025 is signs that Beijing it's starting to sandbag itself against future incoming tariffs from the West, specifically the US. Already we're seeing changes to liquidity ratios, policy and local government that haven't been in place since 2017 and 18. We're also starting to see policies around employment, aged care, and other social services that have not been enacted or tweaked in over half a decade.

Couple this with signs of increased infrastructure spending changes to manufacturing orders and a shift in direction to internal purchases. Shows Beijing really does mean business And is preparing to fight fire with fire. Most notably that ‘fire’ power is the tweaks that's happening to the renminbi.

The depreciation that has been allowed by the Peoples Bank of China (PBoC) shows very clearly that if tariffs are to be placed on Chinese exports the appearance at the import docks will be one of negligent, even better off positioning in price. It is a very, very savvy way of countering arbitrary cost increases from its biggest market, that of the US. How Washington responds to this change is likely to be just less dramatic.

Be prepared for a full blown currency trade war over the next four years as Beijing and Washington trade economic barbs. The winners and losers are already starting to present, case in point is the impact and slide in price of the Aussie dollar (AUD). Currently sitting at a 5 year low to start 2025 against the US dollar and having seen a 10 per cent decline against the JPY, and 8 per cent decline against the CHF, EUR and even a 5 per cent decline against the GBP.

The AUD’s China proxy thematic is well and truly kicking and the Aussie will be a key part of the China sandbagging thematic trade of 2025. 3. Meaningful living Do not underestimate the change in social structures around ‘meaningful living’. With aging populations across the developed world more and more societies are shifting to pursue healthier and more meaningful lives.

This is the rise of online and AI driven programming health treatments, new age drug consumption and a concentration on preventative medicine and health products. Meaningful living is moving the dial in policy, economies, and businesses. You only have to look at Apple's investment in its fitness app or the rise and rise of wearables.

Increase content on social media and the impact that AI is now having on medical and health related industries. On this point look to healthcare, particularly AI-driven advancements and obesity treatments to continue to be the stand out areas. Then there will be the changes to consumption behaviours, nutrition and affordable foods, ‘core value’ items over mass consumption as well as demand for more sustainable consumption practices.

The advantage of the meaningful living thematic is that it will likely be fairly isolated to the issues that will present from thematic 1 and 2. You will also be fairly insulated from changes of things like inflation, interest rates and politics. 4. Energy Thirst The thirst for energy supply coupled with decarbonisation is going to be a thematic not just of 2025 but over the next decade.

What will be different in 2025 is a short- and long-term supply change. Once again, nationalism will play a part here – the Trump administration has made it a cornerstone of its re-election pitch that oil will be front and centre in the US’s energy supply. However at the same time Elon Musk’s presence makes the outlook for battery storage and Electric Vehicles (EVs) also very interesting.

Longer term – energy will also face the ultimate question of 100 per cent renewables, a hybrid model that includes fossil fuels and/or a model that involves yellow cake. Uranium is facing an interesting period, the demand from China, France, the US and the like for nuclear energy is growing by the year. We are also now seeing nations that have never entertained nuclear having a debate on it as well (Australia is case in point).

Thus from a trade and investment point of view – we need to consider three points here: Supply - who are the suppliers that will benefit short term who benefits long term? And are there players that will benefit over the entire period? Demand – As stated in thematic 1,2 and 3 energy demand is only going to increase and if we include thematic 5 – not only will demand increase it could move almost exponentially.

Delivery – what form of apparatus is needed to deliver the energy nations need? That means everything from renewables to nuclear, micro units (household solar) to macro units (power plants). As well as energy storage, carbon capture and grid optimisation. 5.

AI the third digital revolution It’s been two years since ChatGPT’s debut – and in those 24 months more value has been created than in the 65 years from 1945 to 2010 and we are still early in AI’s widespread adoption. AI is being called the third digital revolution after the invention of the computer and the internet. The difference in 2025 from 23 and 24 is we are moving from “infrastructure” and “enablers” to applications.

Those programs that will drive efficiency and market leadership. Already the fight is on to be the “it” provider here as the likes of Alphabet, Meta, Microsoft and Amazon continue to redefine their individual offering. The trends here that will matter in 2025 are things like enterprise adoption of AI, which firms are adopting AI and its positive impacts?

Rapid increases in AI capabilities, surprising even the most optimistic expectations and how fast can it move? Expanded profit opportunities, reducing debates over AI’s return on investment. The faster we can understand the pace of these changes the more investors can capitalise on AI’s transformative potential.

In short, with these five thematics as our basis for 2025, it will be an exciting and transformative year.