Divorce a l'Americain

The Liberal World Order and NATO are dead ducks.

That opens the way for the Trump 2 Administration to hit Europe with very high (remedial/reciprocal) tariffs in April. Trump has no need for Europeans to help him with Ukraine.

The EMs are also in for a big hit in April. (See Anatomy of Exceptionalism- Chapter 2, Feb 10, 2025)

The US (and no one else’s) ceasefire in Ukraine, extricates the US from the cheapest proxy war in modern history, but charts the course to the next war. That will be Europe alone versus Russia within 3 years.

China and Putin are the big winners and their view of democracy as decadent is vindicated. No need to stop the aggression for long. China will now be convinced that the US will not defend Taiwan seriously. But he may want to take a swipe at Taipei before the US moves its troops from Europe to the Pacific Basin. That means before 2027.

The post liberal world order is costly: “Go It Alone” replaces cheaper and more effective Alliances. Nationalist economic policies are less efficient than globalisation. These plateshifts may happen gradually. But these will happen fast:

Europe will no longer align with the US on China policy.
European sanctions on Russia will not be lifted if the US does so.
US remedial tariffs on Europe will be damaging economically but fatal to the Trans-Atlantic relationship – including NATO.

The assets that may provide a shield are: Gold, Oil, LNG, Inflation linked bonds, Defence stocks (particularly European and Korean), China AI producers and users, rare earths & strategic metals and the Yen. Start to reduce exposure to US ‘Exceptionalism”. Diversify US$ longs into Yen. Short US stocks with significant supply chains/businesses in China.

The Wealth Preservation Portfolio is at the end of this report.

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