Please see below, an article from Tatton Investment Management, analysing the key factors currently affecting global investment markets. Received this morning – 28/07/2025
The Meme Generation
We start the week with another boost from a trade deal. The European Union has emulated Japan in securing a nearly-uniform 15% tariff on goods exported to the US. The signed agreement included autos, pharmaceuticals and metals (with a quota) but this may have surprised Trump, and that might lead to interpretation difficulties later. Equity markets have greeted it cordially at the open.
Last week, UK economic data releases showed that June’s retail sales rose just 0.9%, failing to recover from May’s sharp drop. Consumer sentiment dipped slightly, and government borrowing widened to £20.7bn, above expectations. Households appear to be saving more, possibly in anticipation of the autumn budget. While this caution isn’t recessionary, it reflects a hesitant mood. Increased savings may be supporting UK equities and giving the Bank of England room to lower rates despite persistent inflation.
In the US, Donald Trump has intensified criticism of Fed Chair Jerome Powell, blaming him for economic weakness due to “high” interest rates. Although Trump lacks the power to remove Powell, he may use the Fed’s $3bn HQ renovation overrun as political leverage. Despite tensions, Trump recently visited the Fed and downplayed any desire to oust Powell—likely keeping him in place as a convenient scapegoat.
Japan’s Prime Minister Ishiba faces mounting pressure after his coalition lost its upper house majority. Despite securing a trade deal with the US—imposing a blanket 15% tariff on Japanese exports but sparing cars from a harsher 25% rate—his domestic support is waning. Japan also pledged $500bn to support US industry, with spending decisions left to the US government. The Bank of Japan responded by reaffirming its hawkish stance, nudging the Yen higher.
Meanwhile, the European Central Bank held rates at 2%, with President Christine Lagarde suggesting the economy is in a “good place.” Markets now believe the rate-cutting cycle may be over.
Back in the US, retail investors—dubbed the “meme generation”—are targeting stocks disliked by hedge funds, using social media to coordinate buying. This disrupts short-selling strategies and drives up borrowing costs for hedge funds. While reminiscent of 2021’s frenzy, today’s meme stock activity is powered by profits from earlier trades and cheap options. Despite past underperformance, some meme stocks have delivered outsized returns.
Ultimately, meme investing is more game than strategy—high-risk, emotionally driven, and not unlike the hedge fund tactics of the 1990s. Still, it’s proving effective for now.
Platinum Prices Rising
While gold remains the most closely watched precious metal, platinum and palladium have seen a sharp price rise over the past year. Gold’s recent gains are tied to geopolitical and monetary uncertainty, particularly under Trump’s presidency. But, over the past two decades, the story for platinum has focussed on its use as utility and industrial use.
Platinum is extremely stable and unreactive, even more so than gold. Historically, its high melting point made it difficult to work with, delaying its widespread use in jewellery until the 20th century. Its real breakthrough came in the 1980s, when it became essential in catalytic converters to reduce vehicle emissions. Palladium followed a similar path, eventually surpassing gold in price at times due to its efficiency in catalysis.
However, their industrial use has also capped their price potential. Demand for platinum jewellery has declined over the past 15 years, and catalytic converters are now widely recycled—25% of platinum supply comes from recycled sources. The global shift to electric vehicles has further reduced demand, leading to falling mine investment and production. South Africa, which holds 88% of known platinum group metal reserves, saw a 7.7% drop in output in April 2025 and nearly 12,000 job losses in the sector.
Since 2022, platinum has faced a persistent supply deficit, projected to continue for at least five years. China remains the largest consumer, with industrial demand falling but jewellery and investment demand rising. Platinum is increasingly seen as a cheaper alternative to gold, especially after Trump’s metal tariffs prompted stockpiling in Chinese warehouses.
Recent data shows a slight dip in Chinese imports, suggesting inventory building may have peaked. Jewellery demand will be key to sustaining the rally. If consumer interest doesn’t match jewellers’ optimism, prices could fall by 20–30%. Yet, if just 1% of China-HK gold jewellery demand shifts to platinum, it could tighten global supply by over 2%.
With property investment out of favour in China and liquidity looking for a home, platinum—historically undervalued—may be poised for further gains.
The Oracle of Trading Platform Kalshi
Prediction markets are gaining traction in the U.S., with Kalshi recently raising $185 million at a $2 billion valuation, and rival Polymarket reportedly seeking $200 million. These platforms surged in popularity during the 2024 U.S. election and, following the Trump administration’s decision to drop legal actions against them, are poised to become a fixture in American finance.
Prediction markets allow users to trade contracts on the outcomes of real-world events. Though similar to betting, U.S. platforms like Kalshi and Polymarket argue their contracts are financial instruments, not wagers. U.S. firms can now claim regulatory ‘legitimacy’ —Kalshi is CFTC-approved, while Polymarket operates in a legal grey area.
These platforms use blockchain technology, with Polymarket accepting only cryptocurrency. Advocates say prediction markets offer a new asset class and powerful forecasting tools. The theory is that market prices reflect the collective probability of an event occurring, aggregating information more effectively than any individual could.
For investors, prediction contracts offer a direct way to hedge or speculate on specific events—such as geopolitical developments—without relying on indirect instruments like futures. For example, Polymarket allowed users to bet on the likelihood of Iran closing the Strait of Hormuz.
Despite their growth, legal uncertainty looms. Kalshi is being sued by several U.S. states that view it as a gambling platform. Polymarket, fined in 2022 for operating without a license, was raided by the FBI in 2024. However, the Trump administration has since dropped investigations into both firms, aligning with its broader deregulatory stance, including toward crypto.
This regulatory leniency has allowed prediction markets to expand rapidly. Kalshi contracts are now available on Robinhood, and some investors liken the sector’s potential to early-stage crypto. Yet risks remain. Prediction markets often suffer from low liquidity, making prices volatile and susceptible to manipulation. Prices can become self-reinforcing signals, creating feedback loops and undermining their reliability as forecasting tools. If widely adopted in financial hedging, these distortions could pose systemic risks.
Supporters argue that deeper markets will resolve these issues and democratize access to information. But with little oversight, prediction markets are entering a “wild west” phase—one that could end in innovation or casualties, as history has shown with other unregulated financial frontiers.
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Marcus Blenkinsop
28th July 2025