Big boys prepare for June 1 in the wake of new talks of tariffs; thus, new uncertainty triggers fresh fears about the market becoming more volatile.
It seems that the market is quietly but steadily losing its calm as the majority of the stock traders in the U.S. are worried. Everybody was talking at this time about the diplomatic dispute and opponents’ respective positions, but the company’s insiders agreed on only the date on which everything has to change that is June 1. This is the date when the 50% proposed import taxes on EU-made goods can come into effect which is true only if a deal between the countries is not reached at the last minute.
As much as there is no official statement, the deadlock in the negotiations has been a cause of concern to the market a good number of times, and many investors are not an exception and this concern has led many investors to seek the answer to that one question, namely, What if the tariffs hit without a deal?
Majority of the big-time investors are making the transition ahead of the potential disruption
So this is a clear example that institutional trading desks, having made significant moves in the last 48 hours, are most probably in the process of taking away capital from sectors that are overexposed. And what does it include? It includes companies in the automotive industry, pharmaceuticals, and international logistics. The only goal is not just to avoid losses but also to predict what areas in the market will benefit the most if there’s an abrupt and unexpected change in the trade environment.
Many funds are capturing the increased bets – short bets across the border and long bets in the US’ pipeline like the energy infrastructure, regional banks, and domestic utilities. The information given is not at odds with the fact that people should be prepared for the market to react in a volatile way if the tariff resolution surfaces.
The market not reacting to the emerging volatility trend
We can see the very first signs of volatility through the VIX which although slightly has already increased for the last two days. The market is still very relaxed, as the options pricing has not confirmed the public sentiment still. Traders are projecting that a surge will occur at the beginning of June so they are already prepared for that event that is June.3.
This might be the market’s way of signaling the possibility of uncertain times and even a steep correction in case the plate is knocked out of an investor’s hands.
Retail investors vigilant of the 72-hour time window before June 1
The days ahead could prove to be most important for the individual investors in the United States of America. Financial advisors are highly recommending clients to:
- Keep alert to real-time news feeds, especially for any updates that have the approval of the Treasury or trade officials
- Put for sale international stocks sooner than later after windfall profits
- Get the index fund’s exposure to lower Europe-heavy holdings checked
- Mint the proceeds of past profitable trades if still heavily reliant on the import of that European Union-based industry
A headline with the potential to move the market might not appear till later than anticipated
One reason that this may be a more dangerous crisis than others is that the story will only come to light once it has become a threat. Suppose the U.S. government imposes tariffs on products from China overnight between May 31 and June 1, the Monday market opening could result in a quick pricing adjustment.
And this is not like at the time of the release of company earnings or inflation data, where there is a set release schedule. It is rather the case of the decision being taken out of the hands of those who are not involved in the decision-making.
The calmness of no noise is the highest indicator
Definitely nothing is confirmed yet. It’s just the absence of news from the negotiators and at the same time, the positioning by professionals’ traders that imply that a big event is just on the horizon.
While I am on the ground as a reporter bringing news to our readers, I intend to be honest with them by means of saying something else: a situation, which seemingly has a quiet nature at the time, may very well become the hottest thing in the market. If you are a part of the conversation, you cannot afford to miss it.
