Financial Notes

MARKETS 📈

Chill the f*** out…

Those were the words I was thinking to myself on Monday morning when I opened up Bloomberg on my laptop and read this…

Surely not again?

It only felt like yesterday we got over the last of the tariffs saga, it’s not even 12 months on and we’re back where we started.

But this time it’s over a mineral rich island somewhere up in the Arctic Ocean.

As i’m sure many of you are aware and up to date by now, Trump made a rather lengthy post on Truth Social, claiming that the US needed to acquire Greenland otherwise it posed a threat to US national security due to the inability of Denmark (the country who owns Greenland), and other EU nations being unable to defend it from the Russians and Chinese.

And if Denmark didn’t oblige, then Trump would place tariffs of 10% on a bunch of EU nations, the UK included, by 1st February.

Failure to agree to his demands, tariffs would rise to 25% by June. 🤦‍♂️

And it didn’t half send markets into a bit of a tailspin in the early part of the week…

Oh, but roll on just a couple more days, and it’s all forgotten about… (kind of).

Trump (strategically?) planted this bombshell perfectly in time to be on the world stage at Davos for the World Economic Forum, only to remove tariffs due to another one of his “deals” successfully taking place.

Markets rallied and investors are, well, happy again…? 🤔

Well maybe, for now at least, but based on my personal opinion, I’m not a huge fan of this level of strong armed tactics to “make deals”.

As a neutral, in the eyes of the US it showcases a position of power, but in the eyes of European leaders, it perhaps exposes their perceived weakness and a willingness to lie down in the face of demands from the President.

Ex-Bank of England Governor and now Canadian Prime Minister Mark Carney had a few choice words to say in his Davos speech, stating:

“We are in the midst of a rupture not a transition, over the past two decades a series of crises … have laid bare the risk of global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.”

It’s a damning speech of the global power struggle currently taking place.

Trump appears to be in pursuit of more of it, Venezuela a few weeks back, now Greenland, and everybody else appears to be on the back foot and struggling to maintain the economic, political and sovereign interests of the nations they represent.

I’m not the most political person, and I’m not the most well versed on all this political shenanigans, but what I am aware of is how it can make it a challenging time for investors.

One tweet (or Truth social post), sends the stock market into a spiral, $1.4T in a single day kind of numbers, only for Trump to reverse everything within the space of a matter of days.

That can impact the confidence in US financial markets at an institutional level, let alone at a retail investor level with someone who may have started the new year looking to get started out investing for the first time.

This can be an unnerving time for investors of all experience levels, especially when the value of your portfolio (potentially, depending on your exposure) is pinned on whether Trump is going to take a swipe at another country next week.

Which he’s been on quite the run of during his time in office.

Whilst we can’t predict the future, we can always look back to try and retain a level of conviction and confidence about the future, even if at times that conviction and confidence seems to have gone out the window.

Think of all the past Presidents, perhaps some were more volatile than others, some were more friendly with their fellow global leaders than others, but regardless, the S&P500 has been on quite the positive run regardless of the President in power, with the exception of George Bush of course, he had a bit of a shocker.

I’ve always used the saying, when in doubt zoom out when it comes to investing in the stock market.

Because it can be all too easy to get enticed in by the noise in the media, read headlines from news outlets like this…

For some it gets the alarm bells ringing and the “OH MY GOD” hits with the thought that the market is going to crash.

If anything, I think we can all now acknowledge how Trump operates, and to be honest, I’d like to think he’s been figured out.

But all I will say is perhaps the next couple of years is a time to practice calmness and patience with our portfolios, and focus on the long term performance rather than the short term chaos which is presented from time to time.

As has been probably a good rule of thumb for any President or catastrophic event of any magnitude that we’ve seen in the past…

🧘‍♂️📈🧘‍♀️

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