David Kruk (Head of trading desk) is a trader at LFDE. In constant communication with operators, at the heart of the markets, he regularly provides us with his thoughts and summaries. Here are those from the start of the year.
The New York stock market has had a good start to the year, apart from a small accident on the indices at the end of January… But Wall Street loves Donald Trump. The major US stock market indices have set new records since his election in November. And for 2025, the S&P 500, the most closely followed index in the United States, had its best week ever for the start of a presidential term, starting on 20 January, Ronald Reagan in 1985 (+1.7%). Before it was heckled by China’s low-cost AI model “DeepSeek”.
Here’s an initial observation. Nothing seems to be stopping the US market at present, as the indices rebounded violently the day after the fall triggered by the ‘DeepSeek’ phenomenon. In his speech on 30 January, David said that he was blown away by the enthusiasm of private American investors, who were increasingly taking part in the rise in the markets and devoting a larger and larger proportion of their savings to equities. Until now, these investors have taken judicious advantage of market lows to strengthen their positions, and with success, as they did during the recent downturn triggered by fears of the ‘DeepSeek’ impact. For David Kruk, the US market still has a long way to go, supported by strong momentum. While the share of private American investors is growing, other experts do not see this as a good thing.
In the past, the massive influx of private investors often signalled to institutional investors that the market had reached maturity and was nearing the top. Warren Buffett, a master of catchphrases and a master thinker for many asset managers, used to say that : ” It’s when my taxi driver tells me to buy a share that I know I have to sell it “.
With regard to the “DeepSeek” phenomenon, the LFDE trader quotes Goldman Sachs: “the macro risk exists but will reinforce the major productivity gains in micro terms. There will be winners and losers
Good timing for Europe
In Europe, inflation is heading towards 2%, paving the way for more rate cuts by the ECB than by the FED. Sooner or later, the impact of this rate cut will benefit the European economy. David Kruk was the only one to believe that the European market would return by the end of 2024, against all the odds. At that time, the European markets were underperforming, and its indices were shrouded in an excess of pessimism, according to the trader. (Eurostoxx 50 +7.8% and S&P 500 +3.06% from1 January to 5 February).
In Europe, the risks are more numerous but known. “We may be nearing the end of this period of pessimism. With growth almost non-existent, five rate cuts are envisaged, opening up the possibility of expansionary policies such as in Germany after the elections. China remains in a rut, but the slightest improvement could give European growth a boost. Earnings growth is expected to be 8% on the Old Continent, compared with 15% in the USA. And European equities are more generous in terms of dividends,” continues the trader.
Finally, the confidence index of US small business managers is at a six-month high. Despite a 10-year rate that has retreated to 4.6%, the market consensus now expects the Fed to cut rates twice by 2025. While there are a few fewer surprises in the economic announcements, the growth figures remain positive, even if they are a little less robust. The first corporate earnings reports for the fourth quarter are solid, and are accompanied in particular by optimism among CIOs,” says our speaker.
But not everyone is convinced, and David Kruk believes that stocks other than blue chips have a greater upward potential. Wall Street’s fine performance was in fact driven by a handful of heavyweights. The record-breaking performance of the S&P 500 and Nasdaq contrasts with the more modest growth of the equally-weighted S&P 500 index and the Russell 2000 index, which includes mid-cap US listed companies (up 3.86% from 1 January to 5 February for the Russell 2000 index, compared with 3.06% for the S&P 500 index). The Head of LFDE’s Trading Desk is thinking of revenge for the 493 other stocks in the S&P 500 and the Russell 2000, i.e. the stocks outside the magnificent seven (Tesla, Google, Meta, Microsoft, Nvidia, Amazon and Apple).
The Russell 2000 jumped 10% in the wake of the election, but has since given up half its gains. “In theory, America First should benefit the smallest companies that do most of their business in the United States”, he explains at (+60% since 2023 for the SPX and +30% for the Russell 2000 since January 2023).
