Global Lens | Record High For S&P 500: Thierry Wizman Of Macquarie On The Key US Data To Watch

Look, I think it will sustain if we get more progress with regard to deal making in the realm of international trade. This is not inconceivable. Of course, we've already seen a few deals happen. We've seen the deal that the US has done with the UK. Last week we saw completion, effectively, of the contours of the deal that the US has done with China. Yes, it's true that July 9th stands out as a critical date because that is 90 days past the period of reprieve that President Trump gave us in April. But nonetheless, as I keep saying, I do think that it's possible that that date will be extended as long as all parties are negotiating in good faith and as long as the market seems to think that the worst-case situations coming out of the Liberation Day reciprocal tariffs are not going to prevail and that we will see diminutive reciprocal tariffs on at least most of the US's trade partners. I do think that stocks can continue to rally. One of the reasons that stocks in the US continue to rally is because the dollar is weak and has stayed weak despite the rally in stocks and the rally in other risky assets over the past two months. The fact that the US dollar is weak is going to help operating margins for many of the companies in the US indexes that sell product abroad, including the technology companies. And I think this is one part or one aspect of the oxygen that the market is benefiting from right now.

Well, this is all going to depend ultimately on a few things, but I think the most paramount things are, first, that the US dollar is expensive from a broad, long-term historical perspective. It may be as much as 30% overvalued in real terms still. That's the first thing. So, the other thing, of course, is that investors themselves, foreign investors, global asset allocators, are probably overweight not just the dollar but US assets as well. And so, to the extent that they recognize that the dollar is expensive, to the extent that they recognize that US assets are currently much richer than assets abroad, we will see a rotation over time out of the US dollar and into foreign assets as part of a broad rebalancing. This will happen on the part of private investors. Of course, it could also happen on the part of international reserve managers. But as this happens and presumably takes place over the next few years, you will see the dollar decline. It can decline relative to the Canadian dollar. It can decline relative to the euro, to the Japanese yen, to the Korean won, even against some of the more, you know, less important currencies like the Norwegian crown. But we do see this as a general trend. We've seen over history that when the US enters a depreciating trend, these are multi-year trends. These are multi-year events. They don't last for a matter of weeks; they last for a matter of years.

Well, I'm factoring in really just two things. First of all, is the Fed going to feel comfortable that it has gotten enough data on US inflation to reflect the impact or the impulse coming from tariffs? Of course, if they deduce that that impulse or that impact is small and not durable, they may very well decide to cut. The other thing that is prevailing on the Fed is just the direction of the economy generally in the US. Is it strong or is it weak? I tend to view it as weakening. Certainly, we've gotten a lot of forward indicators of the labor market that suggest that we are seeing a weakening there: slower hiring, lower quit rates, and intentions to hire weakening as well. So, is this all going to prevail on the Fed in a way that's going to make them cut in July? I don't think so. It's probably still early. We still probably will not have seen enough evidence of whether or not tariffs are affecting inflation. But certainly by September, based on what Chair Jay Powell has already said, we may have seen a lot more evidence that will allow the Fed to move if in fact the direction is to cut. So I think it's more of a September event, not a July event. It doesn't mean that it will be followed by several rate cuts. It may be followed by only one more this year. But certainly September feels like the focal point or the focal time and place where the Fed will be willing to cut again if the data is conducive to that.