Everything has gone Gothic...

The US continues to assert primacy over anything and everything that moves. This will be a tricky cycle to navigate, but we remain constructive on global equities.

Donald Trump has lived up to his reputation to shock.

China has ensured that we live in interesting times with technology breakthroughs.

So much has happened since our last post, that my head is fully spinning.

Trade wars, tech wars, chaos in markets, but a bull trend intact.

Where do we start, and how can we make sense of any of this?

First Canada went Gothic.

Then Mexico went Gothic.

Donald Trump thinks Spain is part of BRICS.

We know what comes next.

The entire world looks set to go Gothic.

It will get emotional.

This is all down to the Make America Great Again (MAGA) script of Donald Trump.

There are so many Executive Orders (EO) emanating from The Resolute Desk that it is nigh impossible to keep up. Whether any of this moves the dial on the key mission to reshore American manufacturing, shrink the trade deficit, and confront American adversaries, whoever they may be, is a moot point. We just don’t know.

Just take the question of the adversaries.

Is Canada now an American adversary?

The 25% tariff treatment may well suggest that to be the case.

Cutting through this noise is extremely difficult.

To stay sane, we take the view that the world has bifurcated between the world view of Americans, and that of everybody else. We cannot look at it any other way.

On some questions, both camps can be right.

Own some key positions in both US and non-US markets.

For instance, gold seems to be catching a bid wherever you may be.

Owning gold makes perfect sense, XNAS: IAU, along with gold stocks XNAS: RING. Equally, the US dollar looks strong in all currencies. Short-term US Treasury Bills do not have the near-term risk of capital losses from rising interest rates. The interest earned will fluctuate, but they are safe. The XNAS: SHV is one possible choice.

Of course, long-duration government bonds are a good choice when interest rates are likely to fall, especially going into a recession. However, the US employment data is robust, and the economy seems to be travelling fine, for now.

U.S. Equities are not cheap, but the deregulation agenda is a strong tailwind.

In a previous piece, I suggested that owning the S&P 500 broadly was a good place to start with this new presidency. There has been some water under the bridge now, and so it is a good time to revisit this approach. Picking a few stocks makes sense.

Outside of the USA, we remain constructive and are turning bullish on China-related technology names. These are cheap right now, and the DeepSeek saga has made it clear that China can innovate and make key breakthroughs.

This was not news to many of you, but it did move the market.

The puzzle of this time is that equity markets are shrugging off the uncertainty of the Trump agenda but are responsive to the US-China rivalry.

I think you need to own both China and the USA and vary the mix over time.

The China piece requires us to look more closely at the Hong Kong market, which I will do in a forthcoming piece. You know the drill already. Electric Vehicles (EV), the China technology platform companies, and emerging areas like robotics.

When I reflect on the rivalry between the USA and China, I think they will each have their winners, and that the world will welcome winning products from both.

This is certainly true of EV sales in Australia.

Therefore, I will make life easier and not try and say which side “will win”. This does not seem like a sensible framing of the situation. The alternative is to focus on the companies we think will do well, and to divide the world by market.

The USA is now so dominant, that I think it forms its own category.

However, for the Rest of the World I will focus on regions: Americas ex USA, Europe, Asia, Oceania and Africa. The last two are small, but worth considering.

Let us start with the big one, the USA and look at S&P 500 stocks of interest.