Investing.com -- As per Nigel Green, CEO of deVere Group, one of the world’s leading financial advisory and asset management organizations, investors should prepare for a turbulent summer. The market is expected to face a "perfect storm" of low liquidity, increased geopolitical tension, inflationary pressures on the rise, and persistent debt issues.
According to Green, the coming summer will not be peaceful but rather fast-paced and potentially beneficial for prepared investors. This warning comes as inflation data is projected to exceed expectations, partly due to rising tariff threats, global supply chain disruptions, and a tight labor market in key economies.
Green explained that higher inflation leads to longer-lasting high interest rates, which can unsettle markets. Additionally, summer’s typically thin liquidity can make the market even more unpredictable. With fewer active traders, price movements can become more dramatic, leading to sharper drops but also potentially steeper rallies for well-positioned investors.
A significant concern is the renewed trade tension between the US and China. With back-and-forth rhetoric heating up and policy announcements changing weekly, investors are dealing with a policy environment filled with uncertainty. Green noted that these are not just superficial disagreements but a fight for global economic supremacy. The US administration’s protectionist stance is solidifying, and Beijing is responding similarly. This situation can lead to more headlines and swift market reactions, making it a challenging environment for passive portfolios.
Simultaneously, the US is facing a fiscal squeeze. With the national debt surpassing $36 trillion and bond issuance increasing to finance government spending, the appetite for US debt is diminishing abroad. Major holders such as China and Japan are reducing their exposure to Treasuries to stabilize their own economies.
Green explained that bond markets are beginning to feel the pressure. Yields are increasing as fewer buyers step in, which can have significant implications for stock valuations, especially in rate-sensitive sectors.
Despite the short-term turbulence, Green sees reasons for optimism. He stated that the AI revolution is real, and productivity gains driven by automation, large language models, and robotics are expected to drive disinflation in the medium term. This change should improve profit margins for forward-thinking companies.
Green further stated that as inflation cools, central banks will likely pivot to rate cuts, which is where the upside lies. However, to benefit from this, investors must first endure the summer’s volatility.
Green advises investors to use the current volatility as an opportunity and not a deterrent. He suggests they review their positioning, diversify across sectors, asset classes, and geographies, and lean into megatrends like AI and clean tech.
The summer, usually a quieter period for financial markets, is expected to be a crucial turning point. deVere’s advice is clear: review, rebalance, and seize mispriced opportunities before the window closes.
Green concluded that smart investors move early, position wisely, and profit when others panic. He views the expected summer volatility not as a threat but as an opportunity. In his words, volatility is a feature, not a flaw, and currently, there are compelling reasons to act.
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