MARKET OUTLOOK

FOREWORD

Someone who went on vacation on January 1 of this year and came back now would look at their portfolio and see that this year has been remarkably positive for the financial markets.

Indeed, despite all the availability of financial markets, mainly due to geopolitical events, markets have shown impressive resilience.

Investors need to focus on the factors that influence long-term price variations. They need to ignore the short-term “noise” coming from the daily news flow, and focus on the prospects of companies and the valuation of their stocks. This long-term approach can be difficult to maintain in an environment where continuous real-time information can be an easy distraction for investors.

The US trade tariffs announced by Trump were certainly the most disruptive factor for financial markets in 2025. However, ignoring Trump’s daily statements proved to be a worthwhile strategy for investors.

Investors now have enough experience to understand Trump, whose behavior can be explained in four points:

1. Trump yearns for attention.
2. In negotiations, Trump always wants the other side to make a proposal that he can then accept or reject. Thus, his “negotiating” style is to make “outrageous” statements, even if they are not based on fact or are absurd, in order to force the other side to propose a better, more reasonable solution. If he doesn’t like the proposal, the process described above is repeated until an agreement is reached.
3. Trump places more importance on the “appearance” of announcements than on their substance. Many governments and companies have promised major investments in the U.S. that, beyond the headline figures, remain vague and lack specifics. Many of these promises will end up being empty, like those made during the first Trump presidency.
4. Trump is said to be impatient and to have a short attention span. When he’s tired, frustrated or annoyed, he tends to throw a fit and make some of his more outrageous statements. After Trump makes such statements, he’ll either make a contradictory statement shortly afterwards, or members of his administration will rush to do damage control by providing nuance to Trump’s proposals (often this is done by U.S. Treasury Secretary Scott Benett).

This visible pattern in Trump’s behavior explains why investors who ignored the noise of Trump’s statements fared better than those who made decisions based on the U.S. president’s latest pronouncements. We believe Trump is behaving in the same way in his dealings with foreign governments. We think his recent “peace proposal” for Ukraine follows the same process.

The only entity that holds all the “cards”, as in Trump’s way, and can force any legitimate government into submission, are the financial markets. They can drive up long-term interest rates or drive down quotes until the economic pain threshold is reached, at which point no democratically elected government will be able to resist.

Although we remain positive on equity markets over the long term, we expect weakness in the short term, with the technology sector most at risk due to questions over the ultimate profitability of the massive capital expenditure being made in the field of artificial intelligence.

This is not an investment recommendation, but our opinion. Consult your advisor before investing!