Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.

Today, we’re looking at trade negotiations, market volatility, and private assets. 

But first, our number of the week…

+9%

That’s how much Netflix stock has gained year-to-date as of the time of writing. In comparison, the broader S&P 500 is down more than 9 points, while the Nasdaq is down over 12 points.

Sidekick Takeaway: Despite broader market volatility, Netflix’s performance shows that even some tech companies can be defensive assets. Netflix is thought to be one of the last expenses consumers will cut, and the company’s business model is relatively insulated from tariffs. 

Now to our main stories…

Only have a minute to read? Here’s the TL;DR:

• US-EU trade negotiations have failed to gain much traction, with EU policymakers frustrated at the lack of clarity over American goals. Europe may have to prepare for an extended trade war with America, complicating the continent’s growth.
• Wall Street trading desks gained on Q1 market volatility, posting $37 billion in combined trading revenue. The data is a reassuring indication that tariff chaos doesn’t appear to be turning into a financial crisis.
• Blackstone and Vanguard joined forces in a strategic alliance aimed at incorporating more private assets into investor portfolios. The announcement is the latest indication that access to private markets is increasingly expanding beyond the ultra-wealthy.

It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.

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The Art of No Deal: US-EU Trade Negotiations Stall

In the wake of Trump’s reciprocal tariff freeze, trading partners around the world have been trying to strike a deal with the US.

Among them is the EU, whose negotiators sat down with their US counterparts this week.

Under Trump’s initial plan, the EU would have faced a levy of 20%. The pause brings that down to 10%.

Unfortunately, it doesn’t seem like a deal is coming anytime soon. Europe may have to prepare for a long trade war.

US lacks clarity on trade goals

Although both sides have expressed a desire to make a deal, it’s not clear what America actually wants from EU trade negotiations:

• Following Trump’s pause, the EU froze its own retaliatory tariffs, with Ursula von der Leyen noting that ‘we want to give negotiations a chance.’
• However, reporting indicates that the EU’s trade chief left initial negotiations frustrated with a lack of clarity on America’s priorities.
• On Tuesday, EU trade spokesman Olof Gill stated that ‘[w]e need to have a clearer idea of what their preferred outcomes are,’ with other diplomats noting that they’re not sure which US policymakers even have the authority to make a deal.

Since tariffs are integral to Trump’s plan to reshore domestic industry, the US indicated an unwillingness to remove key levies on the EU. 

For their part, the EU has noted several red lines it won’t consider, including adjusting food standards.

The Trump administration’s grievances with Europe have included industrial subsidies, free speech issues, geopolitical alignment, trade deficits, and tax treatment of American tech firms.

Until the US narrows down exactly what it wants from the EU, it’s challenging to consider negotiations being conducted in good faith.

Sidekick Takeaway: Overall, it does not appear as if the US knows what it wants from a trade deal. That makes it impossible for the EU to know what to offer. Despite Trump’s insistence that there will ‘100%’ be a trade deal, it’s anyone’s guess what areas a deal will cover. 

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Chaos Kings: Wall Street Gains on Tariff Volatility 

Following Trump’s on-again-off-again tariff chaos, Q1 brought significant volatility to the markets.

The S&P 500 is down nearly 10% on the year, with the VIX ‘fear gauge’ recently climbing to its highest level since Covid.

In bond markets, volatility measures have also remained elevated as rate expectations fluctuate.

For investors, this volatility has been unpleasant. For Wall Street, however, it’s been a windfall.

Wall Street makes billions on tariff chaos

Wall Street’s biggest banks reported trading revenues of nearly $37 billion in Q1, their best performance in over a decade.

There are several reasons trading desks tend to perform well during volatile periods:

• Traders tend to earn the ‘bid-ask spread’ for providing market liquidity. This spread widens during risky periods.
• Volatility often drives greater client trading and rebalancing, creating more opportunities to earn the spread.
• Finally, market dislocations often drive prices away from their fundamental values, which can create attractive buying opportunities.

Unsurprisingly, currencies have been a particularly active trading area as global supply chains shift. 

Goldman Sachs CEO David Solomon noted that the bank is seeing ‘extraordinarily high, record activity levels’ in its currency trading business.

Sidekick Takeaway: Volatility hasn’t been universally good for Wall Street, with lower IPO and M&A activity likely reducing investment banking fees in the near future. However, record trading revenue is a bright spot for investors and should help offset fears that tariff chaos could turn into a financial crisis.

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Strange Bedfellows: Vanguard & Blackstone Join Forces

If you’re looking for companies on opposite ends of the financial industry, you can’t get much further apart than Blackstone and Vanguard.

Blackstone specialises in private investment funds in areas like infrastructure, real estate, and private equity.

Meanwhile, Vanguard focuses on low-cost public equity and public bond portfolios.

In the latest sign of shifting tides on Wall Street, however, these two firms are joining forces.

As part of a bid to merge public and private investments, Blackstone and Vanguard recently announced a ‘strategic alliance.’

The partnership, which also includes asset manager Wellington Management, will seek to offer the mass affluent access to once-exclusive private asset classes.

Vanguard, Blackstone partnership points to blended portfolios

In the future, Vanguard-style funds are still likely to make up the bulk of investor portfolios. 

There is growing acceptance, however, that true diversification requires incorporating Blackstone-style private assets.

As Vanguard CIO Greg Davis put it, the alliance will ‘help more investors benefit from broader access to private investments by further increasing diversification and pursuing higher returns.’

This attitude aligns with our philosophy at Sidekick. 

The ultra-wealthy have long incorporated private investments along with public ones – increasingly, investors across the spectrum are gaining the opportunity to do so as well.

Sidekick Takeaway: The Blackstone and Vanguard alliance comes at an opportune time for private markets. With public markets increasingly volatile in Q1, the opportunity for added resiliency and diversification through private allocations has arguably never been more important.

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Please remember with private markets, these products are high-risk investments and you are unlikely to be protected if something goes wrong. Don’t invest unless you’re prepared to lose all the money you invest. Our upcoming private markets offering will be available to Sophisticated and High Net Worth Investors only.

Notices

Sidekick Money Ltd is a company registered in England and Wales (No. 13882980). Sidekick Money Ltd is authorised and regulated by the Financial Conduct Authority (FRN 984829). Our address is 21-33 Great Eastern St, London, EC2A 3EJ.

Please remember with private markets, these products are high-risk investments and you are unlikely to be protected if something goes wrong. Don’t invest unless you’re prepared to lose all the money you invest. Our upcoming private markets offering will be available to Sophisticated and High Net Worth Investors only.

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