Insights

ICM Monthly Outlook - July 2025

The first half of 2025 presented a tumultuous journey for U.S. equities, with seemingly insurmountable challenges that tested the resilience of the market. From the AI scare caused by DeepSeek, a Chinese artificial intelligence company, which negatively impacted Big Tech valuations, to the rollercoaster of tariff announcements and reversals, and the escalating military tensions in the Middle East, investors faced a gauntlet of uncertainties. Despite these headwinds, the S&P 500 not only weathered the storm but achieved an all-time high of 6,377, illustrating the market's remarkable ability to adapt and thrive amidst chaos. This review delves into the factors that have shaped the market's trajectory, including the impact of President Trump's policies, the devaluation of the U.S. dollar, and the outlook for the remainder of the year, providing a comprehensive analysis of the economic landscape and the challenges that lie ahead.

ICM Monthly Outlook - June 2025

May 2025 saw a strong recovery in U.S. equity markets, with the S&P 500 up 6.7% and the Nasdaq soaring 10%, driven by solid earnings and the Magnificent 7. Despite this resilience, year-to-date returns remain negative in Euro, Sterling, and the USD index, as the dollar has depreciated around 9%. Factors such as U.S. policy debates, the proposed tax bill, and concerns over the national debt have impacted the dollar's strength, leading to rising bond yields. Meanwhile, gold and Bitcoin hit new highs, reflecting a shift towards alternative stores of value amid dollar weakness. Markets continue to climb despite ongoing geopolitical and economic challenges, highlighting investor resilience.

ICM Monthly Outlook - May 2025

Equity markets have continued their snapback since our last update. The U.S. equity market has recovered all ground since April 2nd, boosted by the capitulation on tariffs, solid earnings in Q1 2025, and better-than-expected jobs numbers. Since their lows on April 8, the S&P 500 has risen 18% and the NASDAQ has increased by 24%. Year to date, U.S. equity markets have returned to positive territory. Our central-case scenario is for the U.S. to avoid a recession this year, despite the dent in confidence suffered by some investors caused by President Trump’s policies. We believe that the extent of the rally in equities and the inconsequential widening of credit spreads suggest that most investors do not expect a recession either. We anticipate that global GDP will kick-on based on fiscal expansion in Europe, the subsidence of tariff risk, a strong pipeline of new orders after the U.S. inveigled trade partners into larger deals than would have been on the table, and a rebound in consumer confidence. We expect to see a plethora of upward revisions to global GDP growth forecasts.

ICM Monthly Outlook - April 2025

Liberation Day has usurped all that went before it this year. Uncertain U.S. policy around tariffs has whipped up strong economic headwinds globally. Investors, politicians, policymakers, and the general public prefer certainty and will think twice in future dealings with the U.S. Can we ever go back to the way it was? We still believe the bond market will rein in President Trump's domineering behaviour. However, in the meantime, economic growth will slow as countries and companies reconsider their relationship with the U.S. while Trump is President. And one day, President Trump will be replaced. ICM remains committed to our investment process, focusing on facts, ignoring speculation, and taking an investment time horizon that looks beyond the current intraday moves. History doesn’t repeat, but it often rhymes. ICM remains nimble and capable of quickly moving the risk dial as we see events unfold. ICM’s bond funds had their most lucrative periods in the aftermath of crises. ICM’s bond funds have largely derisked to avoid any significant drawdown while we await further developments. ICM is happy to have higher-than-normal cash and short-term investments in highly liquid assets, ready to deploy when we have greater certainty.

An Economic Analysis of Quantum Computing

In our recently published white paper on the economics of quantum computing, we found that most approaches to building a quantum computer are likely to be too expensive and impractical for end-users. While much of the current discourse in this space centres on scientific feasibility and engineering hurdles, we see commercial viability as the most important litmus test for any quantum computing company. After all, it’s not enough to simply build a quantum computer - if it’s too costly or unwieldy to deploy in real-world industry settings, its impact will be limited. The unit economics at scale must make sense. Commerciality also offers one of the most accessible lenses through which to assess the field - it doesn’t require a background in quantum physics or advanced engineering, just a grounded view of business fundamentals. The field has made consistent progress over the last ten years, punctuated by the recent announcements by majors like Google (with its Willow chip) and Microsoft (with its Majorana 1 chip) which has brought quantum computing well into the public view. It’s heartening to see the genuine progress in a field that promises to have a large impact on the world. That said, ICM shows that it is necessary for companies to have a pathway to commercial viability. This is a point in time analysis made with publicly available information and best estimates. Ultimately, it is best seen as a framework for assessing quantum computing companies not just as scientific projects, but as commercial endeavours. Access the full whitepaper via the link below.

ICM Monthly Outlook - March 2025

February and March have been tumultuous months. It is all President Trump’s doing, as far as we are concerned. Investors can’t make head nor tail of President Trump's daily decrees, diatribes, and general lack of clarity. Some investors have found the Trump cards too hard to hold. Markets like certainty, but right now, they have none, forcing some investors to turn risk-off until the dust settles. So, the market’s general euphoria for President Trump’s victory has waned. The President’s own euphoria seems to have waned, given that he has admitted that the U.S. consumer must endure some economic discomfort. Our central case remains that President Trump will come to his senses before any significant adverse unintended consequences. Let us not forget that the equity market, the bond market, and big business in the U.S. looms large over President Trump if he gets too wayward with these policies.

ICM Monthly Outlook - February 2025

Financial markets have enjoyed a decent start to 2025. Year to date, in rank order, the Euro Stoxx 50 is up 10.0%, the Dow Jones is up c.4.8%. the S&P 500 is up c.3.2%, and the NASDAQ is up c.1.7%. The oil price is up 2.6% year to date. The gold price has increased 10.2%, in a straight line, whereas US equities have been a roller coaster for investors this year so far. We can confidently say that volatility will likely continue for the foreseeable, given President Trump's predictably unpredictable behaviour. President Trump is doling out populist executive orders faster than Elon can tweet. No day goes by when the world is not left wondering what comes next from the leader of the free world. By way of example, consider the 6th of February; but you can take your pick of any day since the 20th of January. On the morning of the 6th, the US President negotiated a peace deal between, ahem, the PGA Golf Tour and LIV Golf, and in the afternoon, he announced that he would “take over” Gaza. That is one hell of a day’s work by anyone’s standards! I fear complacency for whimsical decisions will have long-lasting consequences.

ICM Monthly Outlook - January 2025

Happy New Year, everyone. 2024 was another prosperous year for anyone who went long and stayed long risk assets, just like in 2023. The US economy showed remarkable resilience in 2024, confounding the chorus of doomsayers proclaiming an imminent recession for much of the year. In December, the US Federal Reserve Bank cut interest rates as expected. Chairman Powell’s subsequent commentary tempered expectations for more near-term rate cuts, causing the equity markets to slip. US inflation is now dormant, not extinct. The Federal Reserve Bank’s concern for inflation hinges on President Trump’s policies from here. We are buying the dip, as we explain in our latest newsletter.

ICM Monthly Outlook - December 2024

Investors will look back on the 2024 US presidential election as a turning point for financial markets. Some sectors of the US financial markets have rallied like billyo since President Trump's re-election. Investors expect pro-growth policies, including tax cuts, deregulation, and increased fiscal spending. Investors have interpreted President Trump's re-election as a green light for risk-on, igniting a rally across equities, credit, and cryptocurrencies. Disinflation was on trend all year. Economic growth was better than expected. Interest rates did not fall as fast as anticipated and therein lies some potential for US economic expansion to accelerate, in addition to tailwinds from President Trump's policies. We still believe there are plenty of tailwinds to sustain the rally and potentially accelerate US economic expansion.