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!