BOE Officials Defend Diverging Views With Inflation Path Unclear
Bank of England rate-setters defended their wide range of views on the direction of monetary policy as they laid out to lawmakers starkly different opinions on the outlook for inflation.
In a hearing with Parliament's Treasury Committee, Governor Andrew Bailey highlighted the 'differences of views' between his closest deputies, pointing to recent dissents from Chief Economist Huw Pill and Deputy Governor Dave Ramsden.
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Are Stocks Stuck in a Trading Range?
After a big bounce from the April bottom stocks are having a hard time breaking above 6,000 for the S&P 500. Why is that? And what happens next for stocks?... This story originally appeared on WallStreetZen We have enjoyed a tremendous bounce from the bottom of the April correction. Now it seems we are just a stone's throw away from the all time highs at 6,147. Yet I think it will take a lot more proof of success on tariffs for that to happen. Meaning we have really been stuck in limbo since mid May when took our first shot at breaking above the psychologically important 6,000 level. Since then, we have traded in a narrow range on the ebb and flow of the tariff headlines. My point is that this trading range will likely be in place til investors have more conviction on the final outcome of these plans that could dramatically effect inflation and the odds of recession. We will talk more about that in the June commentary shared below. Market Commentary Here is the most recent picture of the S&P 500 where the current trading range becomes a lot more evident. After flirting with bear market territory in early April we enjoyed a tremendous bounce culminating in the May 12th bullish breakout back above the 200 day moving average (red line). Since then stocks kept moving a notch higher as the tide of tariff stories turned more positive. But then investors started to realize that the 'outline' of a deal with China is different than a finalized deal. Plus, there are at least 10 other major trade deals that need to be hammered out to create a bit more calm such as with Mexico, Canada and the EU. More and more investors believe this is just 2018/19 revisited. Meaning that the trade wars we engaged with back then started with 2 sides very far apart (namely the US and China). Then as time rolled on each side became more open to reasonable compromises. The net result was a return to bullish conditions after an extended correction. Now with investors once again used to Trump's 'unique' negotiating style the odds point to the same being the case here. Yet they are not so certain of that outcome to take out the previous high of 6,147. This points to the formation of a trading range giving investors time to see what comes next. That range is framed on the low side by the 200 day moving average currently @ 5,790 and the psychologically important 6,000 level that we have been stuck below since mid May. In my May 21st Zen Investor webinar I talked in-depth about the risks still out there with tariffs and potential recession. In essence the better those things are sooner we take off on a bullish run above 6,000 followed by a break out to new highs above 6,147. Or simply stated, the bull market would be back on with probably another 2-3 years of upside on left on the clock. Conversely, if the worst feared outcomes for tariffs comes to fruition, then we are looking at likely higher inflation and potential recession. Obviously, these outcomes would result in further weakness for stocks. If just inflation, then maybe retreat towards the April lows of 4,800. If recession, then expect bear market with lows closer to 4,000. Gladly I still see the bullish outcome as the more likely as Trump has shown enough cards that his tariff demands are not really as extreme as first appeared. Some investors are calling this the TACO trade. Trump Always Chickens Out That is an amusing term that is certainly getting its fair share of laughs. However, I think its misstated. It's not chickening out if you never intended to follow through on the threats. It's just part of his negotiating style. Like lowballing someone on the purchase of a house to see if it weakens their position on what they take as the final offer. Clearly most investors have skewed the odds in favor of return to bullish conditions given how we are so much closer to the highs than the recent lows. But again, this is a logical time for folks to press pause and see what happens next before the next major move for stocks. Our investment plan in the short run with a likely trading range at hand is to appreciate that the average stock may be our goal is to own better than average stocks ( stocks!) thanks to the 115 factor review of the Zen Ratings. So, I like our odds to outperform during this holding pattern for the broader market. Note that on the other side of this I still say bull market and new highs is most likely. That is why the majority of our portfolio is Risk On growth stocks with the most upside potential. However, we have just enough defensive/conservative positions sprinkled in to reduce the volatility in our portfolio if things get rough once again. All in all, I think we are properly aligned with current market conditions and ready to skew more bullish or bearish depending on how things proceed on the tariff front. What To Do Next? Discover the Zen Investor service that relies upon my 45 years of investing experience. During that time I have learned vital lessons from 7 bear markets…8 bull markets and just about everything else the 'Mr. Market' can throw at us. I use this knowledge to create a detailed investment plan. Then lean into our proven Zen Ratings quant model to select the best stocks given their average annual return of +32.52%. In total the Zen Investor portfolio now has 20 top stocks that are hand picked for today's unique market landscape. That includes 2 new stocks added in early June with stellar upside potential. If you are curious to learn more, and want to see my current top stocks, then please click the link below to get started now. Discover the Zen Investor & Top Stocks > Wishing you a world of investment success! Steve Reitmeister…but everyone calls me Reity (pronounced 'Righty') Editor of the Zen Investor What to Do Next?
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President Donald Trump announced Friday that US and Chinese officials will meet in London on Monday to discuss trade between the two nations. 'I am pleased to announce that Secretary of the Treasury Scott Bessent, Secretary of Commerce Howard Lutnick, and United States Trade Representative, Ambassador Jamieson Greer, will be meeting in London on Monday, June 9, 2025, with Representatives of China, with reference to the Trade Deal,' the president wrote in a post on Truth Social. The announcement comes after Trump and his Chinese counterpart Xi Jinping spoke for 90 minutes on Thursday. After the phone call, the US president said he was encouraged that ongoing trade tensions could soon be resolved. The last talks between the Trump administration and their Chinese counterparts, held on May 12 in Geneva, represented a major turning point for the global trade war. Delegates from China and the United States announced they would significantly roll back their historically high tariffs on one another. Markets rallied, Wall Street banks curtailed their recession forecasts, and moribund USconsumer confidence rebounded significantly. That marked a significant change from April, when tensions ran so high that trade between the United States and China came to an effective halt. The 145% tariffs on most Chinese imported goods made the math impossible for American businesses to buy virtually anything from China, America's second-largest trading partner. But since then, tensions had re-escalated. Trump on Wednesday said in a Truth Social post that Chinese leader Xi Jinping was 'extremely hard to make a deal with.' Trade talks have stalled, Bessent said, apparently frustrating Trump. Last week, Trump posted on social media that China 'TOTALLY VIOLATED ITS AGREEMENT WITH US.' Trump said that he made a 'fast deal' with China to 'save them from what I thought was going to be a very bad situation.' He added: 'So much for being Mr. NICE GUY!' The Trump administration had expected China to lift restrictions on rare earth materials that are critical components for a wide range of electronics, but China has largely refused, causing intense displeasure inside the Trump administration and prompting a recent series of measures to be imposed on the country three administration officials told CNN last week. For example, the White House warned US companies against using AI chips made by China's national tech champion Huawei. It stopped US companies from selling to China software that is used to design semiconductors. And the US State Department announced it would 'aggressively revoke visas' for some Chinese students in in turn, has accused the United States of 'provoking new economic and trade frictions.' 'The United States has been unilaterally provoking new economic and trade frictions, exacerbating the uncertainty and instability of bilateral economic and trade relations,' the Chinese Commerce Ministry said Sunday. In the meantime, Treasury Secretary Scott Bessent, America's chief negotiator in the détente with China, said talks with China had stalled. But Trump and and Chinese leader Xi Jinping held a long-awaited phone call Thursday, which appears to have lowered the temperature a bit. The New York Times on Friday reported China has issued some licenses for rare earths, although the market is hardly back open. The talks in the UK are significant, and much is riding on their success – US economic growth remains steady but there are signs of cracking. And no one wants to return to April's standoff, which threatened to plunge the global economy into a stocks, which had rallied earlier in the day on a strong jobs report, rose a bit higher after Trump's Truth Social message about the resumed talks. The Dow was up 450 points, or 1.1%. The S&P 500 rose 1.2%, and the Nasdaq was 1.3% higher.
