The Initial Public Offering (IPO) from SpaceX is reaching out to Sid. When the British government privatised British Gas, it ran a massive public advertising campaign urging ordinary people to "Tell Sid” to buy the shares. It was deliberately populist, making share ownership feel accessible and patriotic. It worked. Millions of small investors invested. Today is similar. A frenzy has been created by Elon Musk combining with the investment platforms to sell the sizzle.
There is also an important difference.
Nobody wanted to hear it. Within 12 months the NASDAQ peaked and fell in the region of 80% in the following years. We will discover soon enough whether that is a fair parallel with today.
Was that US stock market peak on 2nd June at 7609 the BIG one? Possibly. On the chart of the S&P 500 “the look” points in that direction. The fall from 2nd June to 9th June looks more like the beginning of something than the end. Support remains down at 6400-6500, representing a fall of 13% from today. Nearer that point it should be easier to consider the downside from that level, or the possibility of a bounce to another new high.
The US inflation numbers were certainly unhelpful, especially in a week when Trump decided he was going back to war with Iran, with all that implies for oil Armageddon and even higher inflation – last night he might have TACO’d on this or possibly not – even he doesn’t know. All of which adds to growing lack of trust in the US as an investment destination, and as reliable allies.
This from John Mauldin, very much an American patriot:
“In the summer of 1944, with the war in Europe not yet won, the United States convened 44 nations at a resort hotel in Bretton Woods, New Hampshire, and wrote the rules of the postwar world. The dollar would be the world's reserve currency. The International Monetary Fund would manage imbalances. The World Bank would finance reconstruction. And the United States Navy underwrote the safety of global trade. For eighty years, it worked.
Today the promises of Bretton Woods are fracturing on every front simultaneously.
The US Navy cannot guarantee the Strait of Hormuz. US Treasuries, the foundational safe asset of the entire global financial architecture, now come with an asterisk. Whether Washington will honour that guarantee depends, it turns out, on whether it approves of your foreign policy. And the president of the United States, referring to the Strait of Hormuz, recently described America as acting like pirates, no questions asked, and meant it as a compliment.”
For some (many?) it feels like the world is ending – I hear so many people tell me that they won’t listen to the news any longer on radio or TV – it is all too depressing. Yet, as John continues:
“The world is not ending. It is restructuring”
That restructuring means that the guarantees and certainties which have been in place since 1944 are being replaced, and that feels very uncomfortable. But their replacements create new opportunities for investors. You just need to be positioned correctly, and as a minimum stay flexible.
Over the week, the S&P 500 was down around 3%, with little going on in other stock markets. In commodities, gold was under pressure again and funds invested into gold miners were down 10% and more. The US dollar looks like it is still heading higher, something first highlighted here on 30th January in the face of a consensus that it was inexorably going lower in 2026. If so, this is a difficult environment for gold, which could drag other commodities down with it.
Finally, I recently sat down with my colleague Joe Richardson, as well as J O Hambro Capital Management’s Clive Beagles, one of the most experienced and successful UK equity income managers around. Having been in this industry 40 years, this conversation feels especially timely.
We covered a lot of ground:
· Where’s the biggest opportunity in the UK right now?
· Is the UK’s discount justified?
· Are small caps setting up like the noughties?
· The dangerous myth of the “safe withdrawal rate”
· The hidden risk sitting in many pensions/ISAs
Watch here: Dennehy Wealth Podcast - Episode 1
We're planning to do more of these, so thoughts on topic requests are welcome.