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Hey fellow investors! The markets have rebounded from their bottom two weeks back! The S&P 500 has already rebounded more than 6%. Most Asian and European markets have recovered as well – Singapore’s Straits Times Index or STI has rebounded almost 10% from its bottom. You can almost feel the shift in sentiment — from panic, to relief, and now… maybe even optimism.

Since the start of April, it felt like we were caught in a financial storm — markets were tumbling, the US dropped its tariff bombshell, and investor sentiment took a hard hit. But now, the skies seem to be clearing. 

First, the US backtracked slightly — announcing a 90-day pause in tariffs for all countries except China. That gave the markets some relief. Then just days ago, another U-turn: electronics like phones and computers were granted exemptions. Suddenly, investors took this as a sign that maybe these tariff threats weren’t so serious after all.

And the markets responded. 

But here’s the thing: I’m still skeptical of the sustainability of the recovery. Yes, the market has rebounded sharply, but analysts have cut their full-year S&P 500 forecasts to an average gain of just 2%. Meanwhile, I see some of my friends diving back into the market like it’s still 2023 or 2024 — years when the S&P returned more than 20%. It’s not just here in Singapore either. The Financial Times reported that US retail investors are also buying the dip enthusiastically. 

Because markets — like humans — tend to have short memories. Some are rushing back in, convinced that the worst is over, that policymakers won’t really follow through with tough measures. Maybe that’s true. But as long-term investors, not every rebound is worth chasing. We need to ask: Has anything fundamentally changed? Is this just a mood swing, or are there solid reasons to believe the road ahead will be smooth?

In today’s post, I’ll walk you through the four key reasons why I think it might be too early to pop the champagne. Stick around till the end — the final reason might just be the most impactful one of all. 

Now, to be clear I’m not turning bearish, but I think it’s time we talk about some deeper risks that are starting to brew under the surface. Especially one that has long-term implications for the way the world views US assets. Even if you don’t invest in the US, remember that the performance of the US markets often sets the tone for the rest of the world, including Singapore. 

Before we dive in, let me remind you that this post is for informational purposes only and not financial advice. Always do your own research and consult a licensed financial adviser before making any investment decisions. I own some of the investments discussed, but what works for me might not work for you.

Alright, let’s get started!

1. The Tariff Pause Is Temporary — and Ticking

Let’s start with the so-called “pause” in tariffs.

Yes, the U.S. did soften its stance after the initial announcement — but only partially. The 90-day delay applies to tariffs on all countries except China. So while the headlines may have sounded like a full-scale retreat, the reality is more of a tactical delay than a true reversal.

And even this delay has a big question mark hanging over it.

The U.S. has essentially given the rest of the world 90 days to negotiate their way out of these tariffs. But let’s be honest — that’s a very short window. We’re talking about trade talks involving the EU, Japan, ASEAN nations, and others — all trying to push back or secure exemptions. It’s highly unlikely these complex issues can be resolved in three months.

Which means this is just a temporary lull.

As we get closer to the end of the 90-day period, markets may once again be on edge. Investors will start second-guessing: Will the tariffs be reinstated? Will some countries get exemptions and others not? The uncertainty will creep back in — and if history is any guide, volatility will return with it.

So yes, the market is enjoying a breather right now. But the clock is ticking. And when time’s up… are we in for the same pain again? I’m not sure whether the old heart of this uncle can take many more of such volatility! 

2. Policy Uncertainty Remains High

One reason I’m staying cautious is this: even though the market has calmed down for now, the bigger issue of policy unpredictability hasn’t gone away.

The way the tariffs were introduced — with sweeping scope and without much warning — was already a shock. But what’s even more telling is how quickly they were partially walked back. Within days, we saw a 90-day delay, and then more exemptions added, including for key electronics like smartphones and laptops.

This kind of back-and-forth suggests that economic policy decisions — ones that can dramatically move the stock market — are being made quickly and, at times, in extremes.

And if it can happen with tariffs, it could happen with other policies too. Whether it’s new restrictions, changes to taxation, or moves that affect specific sectors or countries, markets now have to price in the possibility of sudden, sweeping decisions that weren’t even on the radar a week ago.

For investors, this makes planning much harder. It’s not just about watching economic data anymore — it’s about guessing what might come next from a policy perspective. 

For me, it’s honestly quite frustrating. With all this policy uncertainty, it sometimes feels like the hours spent analysing company fundamentals or listening to experts break down demand outlooks can be rendered meaningless overnight. Because right now, the next big price move might not come from earnings, sales, or business performance — but from a sudden policy shift. And that makes it harder for fundamentals-driven investors like us to make confident, long-term decisions. 

And when that unpredictability becomes the norm, the risk premium across all markets tends to rise.

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3. Inflation Concerns Persist – And Tariffs Add a New Twist

While recent inflation readings in the US have shown some easing, investors aren’t celebrating just yet. That’s because there’s a new wild card on the table: tariffs.

In a recent statement, Federal Reserve Chairman Jerome Powell said the Fed will need to closely monitor the impact of these tariffs on price trends in the US before making any moves on interest rates. And that’s a big signal.

Why? Because tariffs, especially the broad-based ones recently announced, can be inflationary. They raise the cost of imported goods, which can ripple across the entire economy — from manufacturing to retail to consumers.

So while the current data might suggest inflation is moderating, the risk is that it could flare up again. And if that happens, it could force the Fed to either delay rate cuts… or in a worst-case scenario, even raise rates further.

That’s not a small issue. Higher interest rates impact the whole market, but they’re especially painful for investments that rely on leverage — and that includes REETs and smaller companies. If inflation surprises on the upside and policy has to stay tight for longer, many income-generating assets could come under pressure again, and does this mean the long-suffering REET investors need to wait out a few more years before seeing light?

In short, the inflation story isn’t over. It’s entering a new chapter — and one that brings a lot of uncertainty for investors.

4. Growing Doubts About US Investability

This last one is less talked about — but to me, it could be the most important in the long run.

There’s a growing sense among global investors that US assets are becoming less predictable — and less investable. The recent trade policy swings, the push for tariffs, and the perception that the US might be willing to let the dollar weaken all add to this concern. Some investors are beginning to question whether holding US assets, including Treasuries, is as safe or strategic as it once was.

This doesn’t mean investors are dumping everything. Let’s be honest — the US still has the world’s most innovative companies and the deepest capital markets. There’s no clear alternative for where to park trillions of dollars. But the doubt is starting to creep in.

And when doubts start to form around the US dollar’s role as the world’s reserve currency, or around the idea of the US as a financial safe haven, that has consequences. 

For Singapore investors, if the USD goes into a structural decline, the diversification in our portfolio that we have painstakingly built up over the years may start to work against us. Translating back to SGD, our portfolio value and our regular passive income will be much lower! 

The Dividend Uncle’s Take – Preparing Without Predicting

So here’s how I’m approaching this.

Yes, markets have rallied. Yes, yields have calmed — for now. But if we take a step back and look at everything that’s unfolded over the past two weeks… the big picture hasn’t exactly improved. In fact, it’s gotten more complicated and the uncertainty has spiked.

Short-term relief is one thing. But for long-term investors like us, we’ve got to ask: what’s really changed? Not much, if we’re honest.

That’s why I’m staying cautious. I’m not chasing this rally like I usually do for other market downturns. I’ve shared at the start of the year that I’m looking to tone down the risks of my portfolio, shifting towards fixed income, diversified hedge funds, and raising cash. I’m reviewing to see whether it may be worthwhile to shift my fixed income exposure to SGD denominated or at least SGD-hedged.  I’m still on top of the regular purchases of REITs and ETFs, but I’ve to keep reminding myself that not every recovery is worth jumping into. Some are just sugar highs. 

This is what I’m personally doing based on my goals and risk profile. It may not be suitable for everyone.

The biggest concern I’m watching? The growing doubt about the long-term investability of US assets. If confidence in US financial erodes, we’re talking about a risk that’s far bigger than just a stock market correction. If the USD goes into a structural decline, there might be substantial consequences. For one thing, Singapore investors’ assets in USD will be worth less when translated into SGD, be it for passive income or overall portfolio value.

So what am I doing? I’m staying diversified, keeping some dry powder, and above all — keeping my emotions in check. No fear, no FOMO. Just strategy.

And if you’ve been feeling that itch to “do something” — maybe this is your moment to pause and review first before taking the next step. Not every market move needs a reaction. Sometimes, I’ve found that the best move is to wait and observe, rather than act impulsively, at least for me.

Let me know in the comments what you intend to do in the current recovery, and whether you’re more optimistic than this uncle here. Let’s have a conversation. 

Until next time, stay calm, stay sharp, and stay invested with purpose.