Daily Morning Brew – May 9, 2025 📅 - Resume Rejected

All HR (No Advice)

Good morning team,

You wake up determined. Today’s the day. You’ve had enough of your soul-crushing job (or the lack of one) and decide it’s time to shoot your shot. You fire up GPT-10, feed it your career highlights (plus a few embellished side gigs), and demand the ultimate résumé. It spits out a masterpiece: "Cross-functional visionary leveraging synergies across decentralized enterprise ecosystems." You smile. You feel invincible. This is the one.

You upload it to the job portal, even tossing in an optional cover letter. You’re all in.

Fifteen seconds later? Rejected.

No explanation. No human touch. Just a cold email:

"Application denied: excessive use of 'breakthrough framework,' insufficient detail on actual execution."

And that, dear investor, is yesterday’s market. President Trump’s US-UK trade deal was the glossy résumé that sent stocks soaring, but it’s already been shredded by the algorithm of reality. Investors are acting like they’ve landed the corner office. The truth? We’re all still in the waiting room, clutching a crumpled CV, hoping for a callback that might never come.

Markets Are Still Filling Out the Application 📝

The S&P 500 kissed its April 2 high of 5,695, then slunk back like it forgot to attach references. Wall Street cheered Trump’s “comprehensive” US-UK trade pact like it was a six-figure offer, but the fine print reads like a temp contract:

• A 10% tariff on UK autos stays, with a 100,000-vehicle quota that’s more photo-op than game-changer.

• The UK’s digital services tax still stings US tech giants.

• Agricultural barriers? Still sneering at your chlorinated chicken.

What did we actually get? A fast-tracked customs lane, some aluminum winks, and a $10 billion Boeing order that’s been in the works for years. The FTSE yawned, down 0.3%, while the S&P 500 partied like it aced the interview, up 1.3% to 5,707.58. This isn’t a deal—it’s a LinkedIn post with too many emojis.

Why the hype? Investors are desperate for any sign Trump’s tariff tantrum is cooling. The real trade war damage may not hit until June, so markets are grasping at straws—or, in this case, a press release.

China Talks: A Zoom Interview With No Camera On 💻

This weekend’s US-China talks in Switzerland are being hyped like a second-round interview. Trump says if they go well, the 145% tariffs on Chinese goods could soften. China’s People’s Daily counters that the US must “show sincerity” and roll back tariffs first. Analysts call it “engagement, not negotiation,” with no deal likely soon.

This isn’t a breakthrough. It’s a diplomatic icebreaker, like matching on Tinder but arguing over who picks the restaurant. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer face Chinese Vice Premier He Lifeng, but until Trump and Xi actually talk, it’s just polite nodding. If this were a job hunt, China’s the employer who “loved your résumé” but won’t schedule a follow-up.

Why does this matter? China’s exports to the US support 16 million jobs. A flop could tank Chinese stocks and ripple to emerging markets. A win might ease global growth fears—but don’t hold your breath.

Macro Moves: Where the Algorithm Swipes Left 👈

Yield Curves: The Ghosted Candidate 👻
The 30-year Treasury auction tailed at 4.819%, a polite way of saying investors left it on read. The yield curve flattened, with the 2s10s spread dipping to 46.3 bps, testing April lows. Bond traders betting on a steeper curve—like a candidate overselling their Excel skills—got squeezed. Yet pivot points at 80 bps (2s10s) and 50 bps (5s30s) are holding, suggesting the steepener trade isn’t dead. It’s just waiting for the Fed to stop playing HR manager who won’t commit to a start date.

BOE Rate Cut: The Reluctant Reference 📞
The Bank of England cut rates to 4.25%, as expected, but with a 5-2-2 split that screamed indecision. Governor Andrew Bailey called policy “restrictive,” hinting at no June cut. Gilt yields spiked, and the pound climbed 0.6% to $1.1228. It’s like the BOE wrote a glowing reference but added, “Don’t call us for a follow-up.” Markets slashed June cut bets to 7 bps, half the prior day’s pricing.

Commodities & Crypto: The Overhyped Interns 🚀

Oil rallied 3.7% to $60.24/bbl on trade optimism and Kazakhstan’s vague OPEC+ compliance nod. Bitcoin hit $100K, up 4.8%, because nothing says “safe haven” like a digital slot machine. Gold dipped 1.5% as risk-on vibes returned. Oil’s rally feels like an intern promising to “disrupt the industry” but forgetting to save the file. Bitcoin’s just doing what it does: mooning on hype, crashing on reality.

Trade Strategy Audit: Polishing Your LinkedIn Profile 💼

Still Hired (Extend These)

• Steepeners (2s10s): The 30-year auction tail offers a better entry. With the Fed on hold (4.25%-4.5% range), curves should steepen if trade talks falter. Enter at 46-50 bps, stop-loss at 40 bps.

• Energy Shorts (XLE): WTI’s rally is shaky—OPEC+ plans June output hikes, and EM demand is wobbling. Short XLE at $85/86, target $81 by July.

• T-Bills (1-3M): Yields at 4% are a safe bet while markets play musical chairs. Buy at 4%, hold to maturity.

Under Review (Rewrite These)

• UK Auto Exposure (e.g., VWAGY): The 10% tariff sticks, hurting UK exports. Trim positions; sell VWAGY above $15.

• Long-Duration Treasuries (TLT): Weak auction demand and flattening momentum signal caution. Reduce TLT to 5% of portfolio.

• China-Exposed Equities (KWEB): Sentiment’s ahead of substance. Trim KWEB into rallies above $30.

• EM Discretionary (XLY): India-Pakistan tensions and Brazil’s mispriced real raise risks. Cut XLY to 10% weighting.

New Picks (Beta-Tested by Market HR)

1. S&P 500 Long vs. FTSE 100 Short (SPY/UKX): The US got a hype rally; the UK got a pat on the head. Buy SPY at $565, short UKX at 8,531. Hedge with a 5% stop-loss.

2. US Tech Long, EM Retail Hedge (QQQ/XRT): No UK digital tax relief boosts US tech. EM retail’s exposed to tariff fallout. Buy QQQ at $485, short XRT at $75.

3. 2s10s Curve Call Spreads: A cheap bet on curve steepening if China talks flop. Buy 80 bps call, sell 100 bps call, max loss 0.5% of capital.

4. Gold Snapback Watch (GLD): Gold’s 1.5% dip reflects short-term risk-on, but a China deal failure or inflation spike (last CPI: 3.2%) could push GLD to $310 by June. Set buy alert sub $300

Strategic Allocation View: Your 2025 Portfolio Playbook 📊

For a balanced, 12-month horizon:

• Cash & CDs (25%): Park 25% in 3-6M T-Bills at 4.5% for safety and yield. Roll over at maturity.

• Core Bonds (20%): Barbell strategy—10% in 2Y Treasuries (3.1% yield), 10% in 10Y (4.0% yield). Hedge with 2s10s steepener.

• Equities (45%): 30% US tech (QQQ), 10% US large-cap (SPY), 5% European cyclicals (SX7E) for contrarian upside if EU tariffs ease. Avoid EM retail (XRT).

• Commodities (10%): 5% gold (GLD) for inflation protection, 5% flat oil (XLE) until supply/demand clarifies.

• Risk Management: Diversify across asset classes; cap single-position risk at 10%. Rebalance quarterly.

Why this mix? US tech benefits from tariff exemptions and AI momentum. T-Bills shield against volatility. Gold hedges inflation risks from trade wars. European cyclicals are a bold bet on underpriced recovery potential.

Final Mic Drop: The Offer Letter That Never Arrives ✉️

Markets are your résumé, and yesterday’s rally was the recruiter saying, “We’re excited to move forward!”—then ghosting you for three months. Trump’s trade deal is less a contract and more like claiming “Python fluency” because you installed Anaconda. Until he and Xi Zoom, bonds bid, and someone admits the UK pact was mostly PR, we’re stuck in the lobby.

So what now? Stay diversified. Hedge your FOMO. Build a portfolio that doesn’t need a callback to win. And when the next “breakthrough” hits, check the job description before you celebrate.

End of note. References available upon the next rally.

Head of HR