27.05.25 - Long vs. Short - The winner is…

European tariffs have been put on hold for another month, temporarily easing tensions and allowing more time to negotiate a trade deal. Without this extension, the tariffs would have taken effect on June 1.

Meanwhile, Swiss watch exports to the US surged by 149% in April. This sharp increase is largely the result of front-loaded shipments triggered by the Trump administration’s tariff announcements in early April. Excluding the US, total watch exports would have declined by 6.4% in the reporting month.

In New York, the number of investors betting against the market continues to grow. According to Goldman Sachs, 2.3% of the S&P 500 market cap is now positioned for lower prices, the highest level since fall 2019.

Markets: US and UK markets remained closed yesterday and are attempting to recover Friday’s losses. Interest rates have pulled back from recent highs, the US dollar is gaining back som ground, and cryptocurrencies are trading sideways following last week’s bounce. Gold is slightly lower but continues to trade above USD 3’300/oz.

My view: With short interest rising, the risk of a short squeeze is growing, especially if markets continue to climb, driven by selective optimism and the tendency to focus on positive data points.
Still, I align more with the short side. Markets appear to underestimate the broader risks triggered by tariff-related uncertainty and a potential halt in the investment cycle. The strong macro data for April should be interpreted with caution, as much of it likely reflects front-loaded activity in anticipation of policy changes.

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