Here are a few curiosities that have come my way in the last few days, in a condensed form and the selection based on my assessment as to their significance. I think we will be talking more on all these points in the future:
YAP – new video
I will publish a new informal ‘at the whiteboard’ style video talk at midday UK time today. There is a return to the Daly Telegraph Guide to Investing from the 1980s and some high-level guidance on the techniques of portfolio diversification.
Deep Dive – May 2025
Trump 2 – 100 days and a little more clarity
I would not normally expect to be writing this monthly piece as an ongoing running commentary on a single macro economic factor, but the impact of Trump’s presidency on the global economy and investment markets and therefore on our personal wealth is so dramatic and directly relevant that I expect that you would welcome a reasoned opinion on the implications of where we are now, just over 3 months into this global (insert expletive of your choice here).
After the first false dawn, when markets (especially in the USA) were assuming that reduced regulation and a more business climate friendly environment would allow already over valued equities to continue marching upwards, the reality of tariffs calculated by a methodology that was so primitive it was genuinely beyond belief, flip flopping on that and all the rest you know about, has all served to create a climate of uncertainty and what’s more, direct and immediate practical consequences including a supply shock for goods coming out of China. Trump’s 100 day speech, reported the day I publish this article, is said to be full of falsehoods and more of the same bombast.
YAP – reality bites?
The unpredictability of the US President means that taking a view on the near-term prospects for asset valuations in the main global stock markets is a mug’s game, but there are some aspects now worthy of note (in no particular order):
- Elon Musk is slowly being pushed out of influence in the administration and sucked back into paying attention to his business interests.
- It is widely accepted that the US has lost the game of brinkmanship with China and whatever is touted as the next stage by the President’s amusingly loyal (or plain stupid) media relations team, it is China that will expecting the US to come calling.
- The Russians have accepted that they have no hope of overrunning Ukraine and serious economic damage is now beginning to tell at home, so they are, I am sure, looking for a peace deal that they can claim is a victory. I doubt that they will get to keep even all the land they currently hold, but I would expect meaningful peace talks sooner than could have been expected until recently. I should say that where I live, there remains strong opinion that Putin will still look at other targets for restoring the glory of the USSR.
- The markets in the USA, both equity and fixed income, plus the value of the US Dollar relative to the global currency mix, vary pretty much directly in line with the Truth Social posts of Agent Orange. Actually, that is not strictly true: markets go down as a rule when he posts and go up when he says nothing. Posts equals bad, silence equals good! Trump playing golf is actually a positive for our personal wealth!
- It is so widely understood, by every rational or intelligent person or organsisation, that the Trump tariffs policy will severly dent global growth and hurt the USA more than any other economy of size, that we can take it as inevitable that the policy will continue to be redrawn, largely eliminated as a universal and crude approach (the Liberation Day chart), and probably refined into focused tariffs and trade deals. That could happen very quickly.
All the above is probably at least a hint that the worst is over, but for obvious reasons, I would not yet be brave enough to to call the bottom of the 2025 markets ‘set back’. Certainly we can deduce that the perception of investors has changed in a way that will establish the next asset allocation cycle. In simple terms, investing anywhere except the USA looks like the easy call for the next 3 years. A new Mag 7 might will be European or Asian!
YAP – new video (old wisdom from the Daily Telegraph)
YAP – Snippets
Here are some of the most interesting points I gleaned from a Morningstar presentation last week, taking a look at prospects for European markets in the second quarter. Although the focus was Europe, the head of global equity strategy was on the call, so the macroeconomic content of the call was actually quite broad.
Naturally the message running through all the commentary was, stick of rock like, Trump’s tariffs. I actually thought it was quite bold of Morningstar (MS) to even offer a forward-looking commentary, and the European lead had to admit that he had needed to redo several of his charts in the days approaching the call, which was at the end of last week, and by today had already been overtaken to a certain extent by further vague prognostications from members of the US administration.