The World Is Still Playing Catch-Up With The US

Economic

Summary:

The S&P 500 has “gone green” for the year to date. A few days ago, the US headline stock market index climbed to a point where it is now higher than it was at the start of January.

It’s still below its (US dollar terms) all-time high set on 19th February. But it really doesn’t have to climb that much further to set a fresh record.

That’s quite the turn-up for the books really, I think most of us would agree. I mean, what about all that tariff stuff? I know that US president Donald Trump has been rowing back a bit from the most extreme levels of tariffs, but the status quo has not returned by any manner of means.

And what about the whole question of interest rates and what happens next with the bond market? Because, you know, if tariffs aren’t going to be the thing that fills the US deficit now, what will? And how will those promised tax cuts be paid for?

You can see why people might be feeling a bit confused. And the truth is, I think it’s sensible to feel confused, or at least not to place too much conviction in any one view. Uncertainty is, of course, the nature of things, but there are times when conditions are supportive of higher levels of confidence in certain outcomes.

This is most definitely not one of those times. Something that has stood out to me in recent weeks is that the traders and investors whose work I follow most closely — those on my “must read” list — are in “low conviction” mode. They’re taking stock, rather than piling in with big aggressive views on what’s going to happen next.

The “End Of US Exceptionalism” Trade Is Still On

So let’s take a step back ourselves, so as not to lose sight of our current thesis here — which is that “US exceptionalism” is over.

US exceptionalism (in the markets sense at least) refers to the fact that US markets have outperformed “non-US” markets handsomely since just after the global financial crisis in 2008. You can tell a long story about why that’s happened but it’s irrelevant to this particular conversation.

The recent period of outperformance was unusually long, and that has led to a certain sense among investors who’ve been trained by experience to “buy the dip,” that the US will never be a place to “underweight.”

Yet US outperformance is not a natural law or an inevitability. There have been many periods during which the US has underperformed — the period between the tech bust and the lead-up to the financial crisis being just one of those. And it’s certainly my view that we’re returning to one of those periods now — where “the rest” beat the US for a while.

Those who have watched the S&P 500 rocket back to its 2025 starting point might be thinking, “well, so much for that.” But there are a number of ways in which the gap between the US and the rest of the world can close.

The obvious one is that US stocks go down and the rest go up. But the gap would also close if all stocks fall, but US ones fall faster — or, as the case is right now, US stocks go up, but others go up faster still.

And so far, this is exactly what’s been happening. I’ll switch to using sterling as the measuring stick, because the majority of my readers pay their taxes in pounds.

In sterling total return (ie including dividends) terms, since the start of the year, the S&P 500 is still down 6%. The FTSE 100 by contrast, is up 5.5%. That’s a punchy outperformance in anyone’s book. The MSCI World index excluding the US — which is an index of 22 developed markets — is up by 6%. And the MSCI Emerging Markets index is up 3%.

In short, the gap is still closing. And so far I don’t see any reason to expect this theme to end soon. Clearly, I’ve been talking about the UK a lot here as an under-appreciated market to explore as a potential beneficiary of the US losing its “only place to own” status.

But there are many other options to investigate too. As I’m writing this, Michael Hartnett of Bank of America (for my money, one of the best mainstream strategists out there), has put out a note arguing that “nothing will work better than emerging market stocks.”

There’s a big wide world out there. Don’t get panicked into ignoring it by a sense of FOMO because the US has rebounded from its April lows.

Send any feedback to jstepek2@bloomberg.net and I’ll print the best. Or ping any questions to merrynmoney@bloomberg.net.

Looking at wider markets — the FTSE 100 is up 0.5% at around 8,670. The FTSE 250 is up 0.5% at 20,950. The 10-year gilt yield is sitting at 4.61%, lower on the day, as are yields on its German and French peers.

Gold is down 2.5% at $3,160 an ounce, and oil (Brent crude) is up about 0.2% to $64.70 a barrel. Bitcoin is up 0.2% at $103,690 per coin, while Ethereum is up 3.3% at $2,620. The pound is down 0.1% against the US dollar at $1.328, and down 0.2% against the euro at €1.186.

Follow UK Markets Today for up-to-the-minute news and analysis that move markets.

Sign up for Bloomberg UK’s daily morning market newsletter, The London Rush. It’s all you need to get you up to date on the most important UK market-moving stories every morning. Get it delivered every day.

The main stories to watch out for next week include:

If you haven’t yet subscribed to the Merryn Talks Money podcast, I highly recommend you do so. Apple folk can subscribe here ; fellow Android users, you could go with Spotify , or just the podcast app of your choice.

Source: Bloomberg Europe

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Thomas

Cryptocurrency

Bitcoin is surging in 2025, igniting speculation about a historic Bitcoin supercycle. After a volatile start to the year, renewed momentum, recovering sentiment, and bullish metrics have analysts asking: Are we on the cusp of a 2017 Bitcoin bull run repeat? This Bitcoin price analysis explores cycle comparisons, investor behavior, and long-term holder trends to assess the likelihood of an explosive phase in this cryptocurrency market cycle.

How the 2025 Bitcoin Cycle Compares to Past Bull Runs

The latest Bitcoin price surge has reset expectations. According to the BTC Growth Since Cycle Low chart, Bitcoin’s trajectory aligns closely with the 2016–2017 and 2020–2021 cycles, despite macro challenges and drawdowns.

Figure 1: Bitcoin’s 2025 bullish price action mirrors previous cycles.

Historically, Bitcoin market cycles peak around 1,100 days from their lows. At approximately 900 days into the current cycle, there may be several hundred days left for potential explosive Bitcoin price growth. But do investor behaviors and market mechanics support a Bitcoin supercycle 2025?

Bitcoin Investor Behavior: Echoes of the 2017 Bull Run

To gauge cryptocurrency investor psychology, the 2-Year Rolling MVRV-Z Score provides critical insights. This advanced metric accounts for lost coins, illiquid supply, growing ETF and institutional holdings, and shifting long-term Bitcoin holder behaviors.

Last year, when Bitcoin price hit ~$73,000, the MVRV-Z Score reached 3.39—a high but not unprecedented level. Retracements followed, mirroring mid-cycle consolidations seen in 2017. Notably, the 2017 cycle featured multiple high-score peaks before its final parabolic Bitcoin rally.

Figure 2: MVRV-Z Score shows behavioral similarities to the 2017 Bitcoin bull run.

Using the Bitcoin Magazine Pro API, a cross-cycle Bitcoin analysis reveals a striking 91.5% behavioral correlation with the 2013 double-peak cycle. With two major tops already—one pre-halving ($74k) and one post-halving ($100k+)—a third all-time high could mark Bitcoin’s first-ever triple-peak bull cycle, a potential hallmark of a Bitcoin supercycle.

Figure 3: Cross-cycle behavioral correlations using rolling MVRV-Z scores and price action.

The 2017 cycle shows a 58.6% behavioral correlation, while 2021’s investor behavior is less similar, though its Bitcoin price action correlates at ~75%.

Long-Term Bitcoin Holders Signal Strong Confidence

The 1+ Year HODL Wave shows the percentage of BTC unmoved for a year or more continues to rise, even as prices climb—a rare trend in bull markets that reflects strong long-term holder conviction.

Figure 4: The rate of change in the 1+ Year HODL Wave suggests confidence in future Bitcoin prices.

Historically, sharp rises in the HODL wave’s rate of change signal major bottoms, while sharp declines mark tops. Currently, the metric is at a neutral inflection point, far from peak distribution, indicating long-term Bitcoin investors expect significantly higher prices.

Bitcoin Supercycle or More Consolidation?

Could Bitcoin replicate 2017’s euphoric parabolic rally? It’s possible, but this cycle may carve a unique path, blending historical patterns with modern cryptocurrency market dynamics.

Figure 5: A repeat of 2017’s exponential Bitcoin price growth may be ambitious.

We may be approaching a third major peak within this cycle—a first in Bitcoin’s history. Whether this triggers a full Bitcoin supercycle melt-up remains uncertain, but key metrics suggest BTC is far from topping. Supply is tight, long-term holders remain steadfast, and demand is rising, driven by stablecoin growth, institutional Bitcoin investment, and ETF flows.

Conclusion: Is a $150k Bitcoin Rally in Sight?

Drawing direct parallels to 2017 or 2013 is tempting, but Bitcoin is no longer a fringe asset. As a maturing, institutionalized market, its behavior evolves, yet the potential for explosive Bitcoin growth persists.

Historical Bitcoin cycle correlations remain high, investor behavior is healthy, and technical indicators signal room to run. With no major signs of capitulation, profit-taking, or macro exhaustion, the stage is set for sustained Bitcoin price expansion. Whether this delivers a $150k rally or beyond, the 2025 Bitcoin bull run could be one for the history books.

Source: CoinGecko

Risk Warnings and Disclaimers

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Damon

Economic

Many fear that America’s withdrawal from the Paris climate agreement will undermine the international consensus to reduce greenhouse-gas emissions. Yet just in the last month, there have been two major steps toward widespread carbon pricing where it is needed most.

To be sure, carbon pricing is not always the best policy, and not all sectors need to be subjected to schemes that require international consistency. If India electrifies its vehicle fleet more slowly than Europe, European industry suffers no competitive disadvantage. But the situation is different in long-distance shipping and aviation, and in heavy industries such as steel and chemicals, which account for around 25% of global emissions. Here, carbon pricing is key to cost-efficient decarbonization, and must be imposed on an internationally consistent basis.

Fortunately, the technologies needed to achieve net-zero emissions by mid-century in each sector already exist. For example, methanol or ammonia can be used instead of fuel oil in ship engines, and hydrogen can replace coking coal in iron production. As matters stand, these technologies would impose a significant “green cost premium” at the intermediate product level, but with only a small impact on consumer prices. For example, even if shipping-freight rates doubled, the price of a pair of jeans made in Bangladesh and bought in London would rise less than 1%. If making zero-carbon steel costs 50% more per ton, that would add around 1% to the price of an automobile made from green steel.

Carbon pricing is essential to overcome the green cost premium, and it could drive cost-efficient decarbonization at a trivial cost to consumers. But in each of these sectors, inherently international products (long-distance shipping) or the international trade in products (steel) make purely domestic approaches untenable. That is why the International Maritime Organization (IMO) agreed on April 11 to impose a carbon levy reaching $380 per metric ton on ship operators whose emissions intensity exceeds a defined threshold.

The IMO agreement is not perfect. The organization aims to cut global shipping emissions by 20% by 2030, but the new pricing scheme would achieve only an 8% reduction. Still, concluding a new multilateral agreement despite a US boycott of the negotiations is a big step forward. China, India, and Brazil were among the 63 countries in favor.

Carbon pricing could also drive decarbonization in heavy industry, but if it is imposed in only some countries, production and emissions will simply move to others. Though the ideal solution would be common carbon prices worldwide for these energy-intensive sectors, there is no international rule-making body like the IMO. The second-best solution, then, is for individual countries to impose domestic carbon prices combined with border carbon tariffs.

The European Union is pursuing this approach. Not only will its emissions-trading scheme likely price carbon around $140 per metric ton by 2030; it is also removing the free allowances that heavy industry previously enjoyed and introducing a border carbon adjustment mechanism (CBAM) to subject imports to the same carbon pricing as domestic production. In principle, this creates strong incentives for decarbonization, while protecting domestic competitiveness.

But the CBAM has been too weak, and heavy-industry decarbonization projects have been delayed. As a result, in March the European Commission committed to strengthening the regime in three respects: by ensuring a level playing field for exports as well as domestic sales; by widening the product coverage; and by improving the measurement of imports’ carbon intensity.

The crucial question now is how developing countries will respond. In the past, several governments – in particular China and India – have criticized CBAMs as protectionist. But their arguments are unconvincing. Combining a domestic carbon price with a CBAM does not give domestic producers a competitive advantage. It simply maintains the competitive balance that existed before both were introduced. Moreover, it is the only way that developed countries can truly decarbonize their heavy industry, rather than hypocritically claiming to reduce emissions that have merely moved to other countries. The objective of the policy is not to raise tariff revenue, but to encourage other countries to impose carbon prices at home.

These arguments are beginning to gain traction in developing countries. China’s own emissions-trading scheme has been extended to heavy-industry sectors, and prices are slowly increasing – though they still hover around $10-15 per metric ton. If carbon prices in China, India, and other developing countries gradually rose to European levels, and if CBAMs were imposed on those outside this low-carbon club, Chinese and Indian companies would also decarbonize. Even better, the impact on local consumer prices would be trivial, and governments would generate revenue.

In this way, the EU’s approach could unleash a global wave of carbon pricing on heavy industry, matching the IMO’s progress in shipping. Ideally, policies would reflect internationally agreed standards for measuring the carbon intensity of production, and some of the revenues from CBAMs – and from the IMO’s carbon levies – would go toward supporting emissions reduction in lower-income countries. These ideas should be debated at COP30 in Brazil this November, regardless of whether an official US delegation attends.

Source: Project Syndicate

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Manuel

Stocks

Economic

Wall Street's main indexes rose on Friday for their fifth straight day, buoyed by the U.S.-China tariff truce earlier in the week even as economic survey data showed a deterioration in consumer sentiment.

The S&P 500 steadily added to gains from late morning, while investors took weak data in their stride. The University of Michigan Surveys of Consumers said its Consumer Sentiment Index slumped further in May while one-year inflation expectations surged to 7.3% from 6.5% last month.

All three main indexes boasted weekly gains after starting out with a steep rally on Monday - after Washington and Beijing agreed to a 90-day pause in their escalating trade war. This was days after the U.S. President and British Prime Minister announced a limited bilateral trade agreement.

Lindsey Bell, chief market strategist at Clearnomics, New York, said Friday's advance was a "carry on from the de-escalation in the trade conflict."

With a solid economy combined with pessimistic investors, Bell expects more volatility ahead as tariff headlines come out, and added that "data could change in coming months."

"I don't think we're out of the woods yet. We're going to have to take it on a day-by-day, week-by-week basis," she said.

Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, said the market is "cautiously optimistic" about the softening stance on trade, but waiting to see where the U.S. eventually lands on tariffs.

"We haven't even begun to see what happens when those tariffs really bite, when firms have to raise their prices to consumers and consumers see fewer goods and less variety on the shelves," said Christopher.

Investors were also left waiting for clarity on U.S. tax policy as Trump's sweeping tax bill failed to clear a key procedural hurdle as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.

The Dow Jones Industrial Average (.DJI) rose 331.99 points, or 0.78%, to 42,654.74, the S&P 500 (.SPX) gained 41.45 points, or 0.70%, to 5,958.38 and the Nasdaq Composite (.IXIC) gained 98.78 points, or 0.52%, to 19,211.10. For the week, the S&P 500 gained about 5.3% while the Nasdaq rose 7.2% and the Dow added 3.4%. Wall Street Advances on Trade Hopes, Data Shows Investor Pessimism_1

Wall Street Advances on Trade Hopes, Data Shows Investor Pessimism_1

Among the S&P 500's 11 major industry indexes, most advanced with energy (.SPNY) the sole loser, down 0.18%.

The biggest gainer was healthcare (.SPXHC), which ended up 1.96% for the day after a volatile week.

One of its biggest index point boosts was from UnitedHealth Group Inc (UNH.N), which regained ground - rising 6.4% on Friday and leading S&P 500 percentage gains - after eight straight days of steep losses.

Investors were warily expecting strategic changes at the insurer after the Wall Street Journal reported it was under a criminal probe by the Justice Department.

Among other individual stocks, Applied Materials (AMAT.O) shares slipped 5.3% after the provider of equipment for chip manufacturing missed estimates for second-quarter revenue.

Charter Communications (CHTR.O) shares rose 1.8% after the cable company said it would buy privately held rival Cox Communications for $21.9 billion.

Shares in Verizon Communications (VZ.N) rose 1.7% after the Federal Communications Commission said Friday it was approving its $20 billion purchase of fiber-optic internet provider Frontier Communications (FYBR.O) after the largest U.S. telecom company agreed to end its diversity, equity and inclusion programs.

Advancing issues outnumbered decliners by a 2.72-to-1 ratio on the NYSE where there were 207 new highs and 34 new lows.

On the Nasdaq, 2792 stocks rose and 1,607 fell as advancing issues outnumbered decliners by a 1.74-to-1 ratio.

The S&P 500 posted 28 new 52-week highs and no new lows while the Nasdaq Composite recorded 62 new highs and 73 new lows.

On U.S. exchanges, 17.61 billion shares changed hands on Friday compared with the 17.04 billion average from the last 20 sessions.

Source: Reuters

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Manuel

Cryptocurrency

Singapore-based Basel Medical Group (BMGL) announced plans to acquire $1 billion worth of Bitcoin (BTC) to strengthen its balance sheet and accelerate expansion across Asian markets.

Basel also revealed that the proposed transaction is being negotiated with a consortium of institutional investors and high-net-worth individuals active in the crypto sector.

Basel CEO Darren Chhoa said the $1 billion acquisition would give the firm “unprecedented capacity” to execute its Asia growth strategy.

He added that capital infusion would create one of the strongest balance sheets among Asia-focused medical providers, enabling it to pursue mergers and acquisitions and enhance its financial resilience.

The firm described the initiative as a “landmark transaction” that would represent one of the largest Bitcoin allocations by a healthcare group in the Asia-Pacific region.

The announcement highlighted an intention to finalize the deal within the current quarter, subject to regulatory approval and standard closing conditions.

Transaction structure and strategic objectives

The proposed acquisition will occur through a share-swap arrangement with external investors, rather than a direct cash purchase of Bitcoin from reserves. Basel stated that this model offers enhanced capital efficiency while preserving liquidity for healthcare operations.

The company’s management sees the diversification into Bitcoin as a hedge against currency volatility and inflation risks in emerging markets, particularly in regions where it seeks to expand.

BMGL also sees the acquisition as a mechanism to attract strategic partnerships in the healthcare and digital asset sectors.

Basel’s leadership said it would provide additional details upon the transaction’s completion and remain committed to regulatory compliance in all jurisdictions where it operates.

Market reaction diverges from Bitcoin trend

Despite Basel’s framing of the move as a financial strengthening initiative, the company’s stock price declined sharply following the announcement.

Its shares fell to a low of $2.10 despite climbing 68% earlier in the day to a high of $3.41 from the daily opening price of $2.84. The volatility adds to the massive 57% drawdown observed on May 14.

Despite the tumultuous price action for the day, the share price mounted a recovery before the trading day ended to close the day down 9.89% to $2.37 as of press time.

The reaction contrasts with recent market behavior in other firms announcing Bitcoin strategies.

On March 12, Rumble saw its stock price rise 5% after announcing a Bitcoin acquisition. Japanese firm Metaplanet gained nearly 20% in a single session on July 22 after disclosing a purchase of more than 20 BTC.

HK Asia Holdings surged 92.98% on Feb. 13 after acquiring 1 BTC for approximately $96,150. Meanwhile, Brazilian fintech Méliuz gained 16.3% on March 6 after detailing its Bitcoin investment framework,

While Basel’s initial market response diverged from those precedents, the company maintains that the transaction is part of a broader financial restructuring initiative rather than a speculative bet.

Source: Cryptoslate

Risk Warnings and Disclaimers

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Manuel

Economic

Political

Moody's on Friday downgraded the credit rating of the United States by a notch to "Aa1" from "Aaa", citing rising debt and interest "that are significantly higher than similarly rated sovereigns".

U.S. President Donald Trump's sweeping tax bill failed to clear a key procedural hurdle on Friday, as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.

As written, the bill would add trillions of dollars to the federal government's $36.2 trillion in debt over the next decade.

"Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," Moody's said in a statement.

U.S. Treasury securities fell and yields rose late Friday after the news.

COMMENTS:

STEPHEN MOORE, FORMER SENIOR ECONOMIC ADVISOR TO PRESIDENT DONALD TRUMP AND HERITAGE FOUNDATION ECONOMIST

“Outrageous. Moody’s has now become a political arm of the Democratic Party. How is extending the Trump tax cut going to reduce the value of the bonds. If a US backed government bond isn’t triple A asset then what is?”

CHRISTOPHER HODGE, CHIEF US ECONOMIST, NATIXIS, NEW YORK

"Fiscal profligacy and irresponsible governance - including the perpetual debt ceiling standoffs - aren't new and there will be a day of fiscal reckoning when Congress will have to reign in debt. But the US borrowing capacity is still unrivaled and potential revenue generation is unmatched. No doubt the US has a spending fueled debt problem, but there is little chance - at least in the medium term - that the US won't make good on its obligations. At some point the market will impose discipline that will force cuts but demand at the moment is still ample for US debt."

TOM DI GALOMA, MANAGING DIRECTOR OF RATES AND TRADING, MISCHLER FINANCIAL, PARK CITY, UTAH

"Very surprising. This is big, markets were not expecting this at all. I think that is highlighting the problems on the budget talks in Congress, the bill failed to pass today in the House committee."

SPENCER HAKIMIAN, CEO, TOLOU CAPITAL MANAGEMENT, NEW YORK

“The downgrade of the US credit rating by Moody’s is a continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector in the United States.”

“I didn’t even blink, totally not a surprise for me.”

BRIAN BETHUNE, ECONOMICS PROFESSOR, BOSTON COLLEGE, NEWTON MASSACHUSETTS

“This sounds similar to what S&P did in 2011. That S&P (downgrade) announcement was not well received by markets, and led to a budget sequester agreement…which led to a reduction in the deficit. Then Trump cut taxes (in his first term) so we backed out of the compromise.”

“The downgrade is a wake-up call for Republicans. They have got to come up with a credible budget agreement that puts the deficit on a downward trajectory.”

JAY HATFIELD, CEO, INFRASTRUCTURE CAPITAL ADVISORS, NEW YORK

"This news comes at a time when the markets are very vulnerable and so we are likely to see a reaction. I expect S&P to be down by nearly 100 points or so but expect it to stabilize later in the week. I suspect that all the tariff related announcement could have had also played a role in the downgrade, even if they don't say so."

Source: Reuters

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Manuel

Central Bank

Political

The Federal Reserve plans to shrink its workforce by about 10% over the coming years, bringing the U.S. central bank in line with President Donald Trump's broader efforts to streamline the federal government, according to a memo that Fed Chairman Jerome Powell sent to staff on Friday.

In the internal memo, a copy of which was seen by Reuters, Powell said that he has directed Fed leadership to find "incremental" ways to trim operations, with a goal of shrinking the Fed's roughly 24,000 person headcount nationwide by about 10% over "the next couple of years." The memo was first reported by Bloomberg.

As part of that effort, the Fed plans to offer a voluntary deferred resignation program to board staff in Washington who would be eligible to retire at the end of 2027. The memo made no mention of any involuntary cuts or layoffs.

"Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources," Powell wrote in the memo, noting the Fed previously made similar changes in the 1990s when President Bill Clinton sought to reduce the size of the federal government.

"I believe it is time to do it again, in that same conscientious and deliberate spirit," Powell added.

In the memo, Powell did not provide many details on how the Fed may revamp efforts, but emphasized any changes would prioritize the Fed's mandates and statutory obligations, and ensure that its work remains "high quality, nonpolitical and mission-focused."

The new Fed initiative comes as Trump has launched an aggressive effort to downsize and reshape the U.S. government via billionaire adviser Elon Musk's Department of Government Efficiency, or DOGE.

While the Fed does not have its budget set by Congress and does not report directly to the White House, Powell said the central bank must be a "careful and responsible steward of public resources." Powell gave a nod to the broader Trump-led effort by noting that the Fed often pursues cuts of its own "when there have been government-wide efforts to improve efficiency, like in the 1990s and now."