President Trump started 2026 with a bang. Financial markets were once again responding to unexpected Trump administration policy decisions, and a number of big US tech stocks announced their results in January. There is a feverish interest in whether the ‘AI bubble’ really exists and a lot of scrutiny on financial results as they are published. The attention is not just on the ‘Magnificent Seven’, but a range of technology stocks which are heavily committed to artificial intelligence.
With this in mind, we will start our round up with an in depth focus on the United States.
United States
The new year had barely begun when the US government extracted President Maduro from Venezuela. It has been suggested that this could be he start of a broader U.S. effort to reshape Latin America’s geo-economic landscape and curb Russian and Chinese influence in the region.
Central America’s proximity to major shipping routes (Panama Canal, Caribbean Sea, Pacific ports) makes it vital for both legal and illicit trade. Russia already exploits these routes via a “shadow fleet” of aging ships which help move sanctioned oil. Russia also uses Caribbean offshore shell companies to manage an estimated $70 billion in assets, according to the Center for the Study of Democracy. Meanwhile China has become a rapidly growing economic force in the region, having provided billions of dollars in development loans to Latin America.
China and Russia have reduced US opportunity in Latin America, and some commentators view the move on Venezuela as a sign that the US want it back. Stricter policing of shipping in the region may increase reliance on U.S. Gulf Coast refineries to replace the lost oil supply from Russia or Venezuela, and push Russia back as a pivotal oil supplier to the region. It could destabilise Cuba given 60% of Cuba’s oil come from Russia and Venezuela, and it would most likely cut into Mexico, Ecuador, and Colombia’s market share. It might also open the door to other China and Russia dominated sectors such as energy and infrastructure, in countries such as Bolivia, Brazil, Argentina, Venezuela, Peru and Chile.
It is not without risk. Coercion could push some Latin American governments towards China, rather than away from it. There needs to be a credible commercial incentive for governments to move towards the US. Force alone will not suffice.
A few days later, Trump rattled his sabre once more, declaring his intention to take control of Greenland. A potential explosive moment soon calmed when he softened his stance and a mutually agreeable ‘deal’ appears to have been struck which gives the US a little more freedom in Greenland, without changing ownership of the country. Importantly, it allowed Trump to claim another victory. Markets wobbled but were probably calmer than expected in the situation, perhaps a sign that few took President Trump’s threats seriously.
Despite the concerns about a recession, the US economy defied downbeat expectations in 2025 and may well do the same in 2026. The main themes appear to be:
1. Jobless expansion. The economy is growing but jobs are not growing at the same rate. Whilst success is typically measured in GDP growth, a slow labour market does make the economy more brittle. This could be read as AI starting to drive up efficiencies and earnings in big businesses, at the expense of employees. Amazon inadvertently leaked that they were laying off 16,000 employees in an email in January.
The S&P 500 climbed above 7,000 points for the first time on 28th January as equity markets continued to rally after Trump’s softening on Greenland. Reduced capital requirements for big banks are also expected to encourage growth. However, the S&P 500 dipped at the end of the month as one big tech stock in particular delivered underwhelming results, causing more concern about a potential ‘AI bubble’. Microsoft was the most notable disappointment, with its shares falling 10% as markets closed on 29th January, whilst Apple, Meta and Tesla surpassed expectations. Alphabet, which owns Google, and Nvidia are due to report in February.
2. The ‘K-Shaped’ economy. Wealthier families will continue to benefit from equity growth in their invested assets, whilst low and middle income families will be harder hit by inflation and a slower labour market. Increasing inequality will have a negative effect on general consumer confidence and this was evident in January’s data. Controlling inflation was a key theme in 2025 and will be again in 2026. Whilst the most pessimistic projections produced after the ‘liberation day’ tariffs were announced have not yet materialised, we know how vital affordability of vital goods and services are to the electorate. It might not matter to Trump in his final term, but he won’t want it to tarnish his long term reputation.
Not content with just an aggressive overseas policy, President Trump picked up his domestic feud with the Fed in January. Jerome Powell, chair of the Fed, released a statement on Sunday 18th January which revealed the latest turn in the power struggle between President Trump and the central bank.
Trump has consistently criticized Powell since his return to power, calling him “Mr Too Late” and a “numbskull” amongst other insults. His frustration is with the Fed’s reluctance to drop interest rates at a pace which would suit his economic plans, which are based on driving up already significant levels of government debt.
Powell’s statement revealed that he is currently under criminal investigation by the Department of Justice. It relates to a testimony he gave to a Senate committee about the cost of renovations to Federal Reserve buildings. His statement was the first time he has directly hit back at Trump’s attempts to remove him and dilute the independence of the Fed.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation…I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve is above the law, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” he said.
Last year Trump aimed fire at Fed governor Lisa Cook, whom he alleged had committed mortgage fraud. Her dismissal was blocked by a federal court and her case will be heard later this month.
There has also been global support for the Fed from other major central bankers around the world who issued their own statement in support of Powell and the independence of central banks.
Powell’s statement may have worked. Trump quickly distanced himself from the criminal investigation, and his efforts are now turning to Powell’s replacement in May when his term as Chair expires. He has nominated Kevin Warsh for the position, which requires confirmation from the Senate. Warsh was a member of the Fed’s board from 2006 to 2011, at the age of 35. He is viewed as closely aligned to the White House.
Whilst there is little sign of markets being concerned at the moment, a compromise of Fed independence could cause longer term uncertainty and volatility in the US.
UK
Whilst there was a little turbulence in UK equity markets in response to Trump’s threats to Europe over his Greenland position, the moment passed and UK equities continued to tick upwards. The FTSE 100 breached 10,000 points for the first time on 2nd January, hitting an all time intra-day high of 10,257.75 on 16th January.
UK inflation increased to 3.4% in the 12 months to December 2025, based on the Consumer Prices Index (CPI) measure from the Office for National Statistics (ONS). The increase in price changes was unexpected, and the first rise in five months, as price rises slowed in the second half of 2025. Among the chief drivers of the surprise uptick were alcohol and tobacco duty increases, rising airfares and food cost increases.
Whilst this is expected to be a blip, it has dampened expectations of a February rate cut.
The UK housing market recovered in January after falls in late 2025. The price of an average home rose by 0.3% in January and Nationwide expect it to rise 2-4% for the whole of 2026.
Prime Minister, Keir Starmer, spent much of January trying to deal with Donald Trump’s emotions, by saying nothing negative about Venezuela, remaining firm and clear about Greenland, showing a rare moment of anger about Trump’s insensitive comments on British troops in Afghanistan, and then making an historic trip to Beijing. The visit was the first by a British PM to China in eight years, and whilst it may have been more symbolic than a fundamental shift towards a new alliance, it did lay some groundwork for a better political and trading relationship with China.
Europe
The Eurozone economy grew ahead of expectations at 0.3% in the fourth quarter of 2025. Despite tariffs, political problems and economic uncertainties, Europe continues to show resilience, growing for nine consecutive quarters.
Germany and France expanded at a pace of 0.3 per cent and 0.2 per cent respectively, confounding predictions. Germany has borrowed heavily to invest in defence and infrastructure, and there will be some pressure on to deliver a faster pace of growth in future. Spain’s Prime Minister Pedro Sanchez proudly claimed to be the leading the fastest growing developed economy for a second consecutive year, announcing on X “We are closing 2025 with growth of 2.8%, double what is expected for the Eurozone, and in a strong position to maintain solid growth in 2026”.
Whilst the Eurozone is growing, that growth remains slow. It has been the beneficiary of inflows from money diversifying out of the US and seeking a ‘safe haven’. However, fundamental concerns about the underlying traditional economies, such as German car manufacture, will persist throughout 2026.
As inflation is largely under control and has been around the 2% target for some time, there is little expectation of the rate cuts which other central banks are under pressure to deliver.
Far East
China’s economy has also weathered 2025’s economic storm better than was expected last April, when the first shots of a potentially disastrous trade war were fired. China’s problems aren’t solely confined to tariffs. Structural issues such as an ageing population and a property slump made the 5% growth target a challenge. With so much of China’s wealth tied to property, a downturn in property values will knock consumer confidence, and harm consumption.
GDP growth was running at around 4.8% towards the back end of 2025 with domestic consumption still sluggish and exports continuing to power the economy. Whilst exports to the US were predictably down in the year to November 2025, exports to Africa, ASEAN, Latin America and the EU were up by 26%, 14%, 7% and 8% respectively.
China’s fiscal expansion through bond issuance was huge in 2025, running at around 10% of GDP. It is expected to continue in 2026. Rather than invest in infrastructure projects, most of the funds were used to refinance local government debt, assist the work out of troubled property developers and re-capitalise banks. There appears to be a move away from traditional, big infrastructure investment and towards more targeted support for specific industries such as technology, along with attempt to drive up consumption.
Avoiding more political tension with the US will be difficult but important for future success.
Japan has commanded a great deal of attention with it’s huge bond issuance in January, followed by a snap election called for 8th February. Prime Minister Sanae Takaichi hopes to improve on her coalition government’s narrow majority, and holds an outside chance of gaining a super majority. It is a gamble, but if it pays off the result will most likely be greater defence spending and the implementation of her promised two-year food tax suspension. The result would be pandemic level debt-to-GDP ratios. Markets are keeping a close eye for obvious reasons. Japanese bond and currency markets were both predictably volatile in January.
Emerging Markets
We have already covered much of the potential short term impact on Central and South America in our commentary on the US and Venezuela. Investment in Latin America may be dampened, with Mexico hardest hit. South American countries such as Brazil already benefits from close trading relationships with China, and we may see more consider which superpower offers the most attractive alliance during 2026. Argentina should expect to improve its economy in 2026, following last year’s US financial assistance and gains at the mid-term legislative elections for President Javier Milei.
Indonesia’s equity market was plunged into turmoil on the news that MSCI Inc., the provider of the MSCI Emerging Markets index, could downgrade Indonesia to ‘frontier’ classification and issued a warning that it had concerns over transparency and the limited amount of stock available for trading in listed companies.
Summary
We did say in January that investor patience would be tested in 2026. We didn’t expect so much news in what is normally a quiet first two weeks of the year.
Whilst the politics have been turbulent, financial markets have been surprisingly resilient. They have wobbled and dipped as US foreign policy became increasingly aggressive, but not as dramatically as they might have been. Trump’s detractors have coined the acronym ‘TACO’ – Trump Always Chickens Out – to ridicule the threats which he rarely backs up with action. Whilst the world does not want to fully test this theory, there seems to be an acceptance that his words are not to be taken at face value.
And finally…
Piggy banks have their origins in clay.
The origin of piggy banks comes from “pygg,” an affordable Old English clay used in the 15th century to make household items such as plates and jars. Whenever people had a few extra coins, they would simply drop it into their clay jars which they referred to as a ‘pygg’ bank. As the word sounded so close to the animal the makers eventually made into the shape of a pig.
If this blog has raised any questions why don't we have a quick chat?
Garry Hale MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.
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February Market Commentary
Introduction
President Trump started 2026 with a bang. Financial markets were once again responding to unexpected Trump administration policy decisions, and a number of big US tech stocks announced their results in January. There is a feverish interest in whether the ‘AI bubble’ really exists and a lot of scrutiny on financial results as they are published. The attention is not just on the ‘Magnificent Seven’, but a range of technology stocks which are heavily committed to artificial intelligence.
With this in mind, we will start our round up with an in depth focus on the United States.
United States
The new year had barely begun when the US government extracted President Maduro from Venezuela. It has been suggested that this could be he start of a broader U.S. effort to reshape Latin America’s geo-economic landscape and curb Russian and Chinese influence in the region.
Central America’s proximity to major shipping routes (Panama Canal, Caribbean Sea, Pacific ports) makes it vital for both legal and illicit trade. Russia already exploits these routes via a “shadow fleet” of aging ships which help move sanctioned oil. Russia also uses Caribbean offshore shell companies to manage an estimated $70 billion in assets, according to the Center for the Study of Democracy. Meanwhile China has become a rapidly growing economic force in the region, having provided billions of dollars in development loans to Latin America.
China and Russia have reduced US opportunity in Latin America, and some commentators view the move on Venezuela as a sign that the US want it back. Stricter policing of shipping in the region may increase reliance on U.S. Gulf Coast refineries to replace the lost oil supply from Russia or Venezuela, and push Russia back as a pivotal oil supplier to the region. It could destabilise Cuba given 60% of Cuba’s oil come from Russia and Venezuela, and it would most likely cut into Mexico, Ecuador, and Colombia’s market share. It might also open the door to other China and Russia dominated sectors such as energy and infrastructure, in countries such as Bolivia, Brazil, Argentina, Venezuela, Peru and Chile.
It is not without risk. Coercion could push some Latin American governments towards China, rather than away from it. There needs to be a credible commercial incentive for governments to move towards the US. Force alone will not suffice.
A few days later, Trump rattled his sabre once more, declaring his intention to take control of Greenland. A potential explosive moment soon calmed when he softened his stance and a mutually agreeable ‘deal’ appears to have been struck which gives the US a little more freedom in Greenland, without changing ownership of the country. Importantly, it allowed Trump to claim another victory. Markets wobbled but were probably calmer than expected in the situation, perhaps a sign that few took President Trump’s threats seriously.
Despite the concerns about a recession, the US economy defied downbeat expectations in 2025 and may well do the same in 2026. The main themes appear to be:
1. Jobless expansion. The economy is growing but jobs are not growing at the same rate. Whilst success is typically measured in GDP growth, a slow labour market does make the economy more brittle. This could be read as AI starting to drive up efficiencies and earnings in big businesses, at the expense of employees. Amazon inadvertently leaked that they were laying off 16,000 employees in an email in January.
The S&P 500 climbed above 7,000 points for the first time on 28th January as equity markets continued to rally after Trump’s softening on Greenland. Reduced capital requirements for big banks are also expected to encourage growth. However, the S&P 500 dipped at the end of the month as one big tech stock in particular delivered underwhelming results, causing more concern about a potential ‘AI bubble’. Microsoft was the most notable disappointment, with its shares falling 10% as markets closed on 29th January, whilst Apple, Meta and Tesla surpassed expectations. Alphabet, which owns Google, and Nvidia are due to report in February.
2. The ‘K-Shaped’ economy. Wealthier families will continue to benefit from equity growth in their invested assets, whilst low and middle income families will be harder hit by inflation and a slower labour market. Increasing inequality will have a negative effect on general consumer confidence and this was evident in January’s data. Controlling inflation was a key theme in 2025 and will be again in 2026. Whilst the most pessimistic projections produced after the ‘liberation day’ tariffs were announced have not yet materialised, we know how vital affordability of vital goods and services are to the electorate. It might not matter to Trump in his final term, but he won’t want it to tarnish his long term reputation.
Not content with just an aggressive overseas policy, President Trump picked up his domestic feud with the Fed in January. Jerome Powell, chair of the Fed, released a statement on Sunday 18th January which revealed the latest turn in the power struggle between President Trump and the central bank.
Trump has consistently criticized Powell since his return to power, calling him “Mr Too Late” and a “numbskull” amongst other insults. His frustration is with the Fed’s reluctance to drop interest rates at a pace which would suit his economic plans, which are based on driving up already significant levels of government debt.
Powell’s statement revealed that he is currently under criminal investigation by the Department of Justice. It relates to a testimony he gave to a Senate committee about the cost of renovations to Federal Reserve buildings. His statement was the first time he has directly hit back at Trump’s attempts to remove him and dilute the independence of the Fed.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation…I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve is above the law, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” he said.
Last year Trump aimed fire at Fed governor Lisa Cook, whom he alleged had committed mortgage fraud. Her dismissal was blocked by a federal court and her case will be heard later this month.
There has also been global support for the Fed from other major central bankers around the world who issued their own statement in support of Powell and the independence of central banks.
Powell’s statement may have worked. Trump quickly distanced himself from the criminal investigation, and his efforts are now turning to Powell’s replacement in May when his term as Chair expires. He has nominated Kevin Warsh for the position, which requires confirmation from the Senate. Warsh was a member of the Fed’s board from 2006 to 2011, at the age of 35. He is viewed as closely aligned to the White House.
Whilst there is little sign of markets being concerned at the moment, a compromise of Fed independence could cause longer term uncertainty and volatility in the US.
UK
Whilst there was a little turbulence in UK equity markets in response to Trump’s threats to Europe over his Greenland position, the moment passed and UK equities continued to tick upwards. The FTSE 100 breached 10,000 points for the first time on 2nd January, hitting an all time intra-day high of 10,257.75 on 16th January.
UK inflation increased to 3.4% in the 12 months to December 2025, based on the Consumer Prices Index (CPI) measure from the Office for National Statistics (ONS). The increase in price changes was unexpected, and the first rise in five months, as price rises slowed in the second half of 2025. Among the chief drivers of the surprise uptick were alcohol and tobacco duty increases, rising airfares and food cost increases.
Whilst this is expected to be a blip, it has dampened expectations of a February rate cut.
The UK housing market recovered in January after falls in late 2025. The price of an average home rose by 0.3% in January and Nationwide expect it to rise 2-4% for the whole of 2026.
Prime Minister, Keir Starmer, spent much of January trying to deal with Donald Trump’s emotions, by saying nothing negative about Venezuela, remaining firm and clear about Greenland, showing a rare moment of anger about Trump’s insensitive comments on British troops in Afghanistan, and then making an historic trip to Beijing. The visit was the first by a British PM to China in eight years, and whilst it may have been more symbolic than a fundamental shift towards a new alliance, it did lay some groundwork for a better political and trading relationship with China.
Europe
The Eurozone economy grew ahead of expectations at 0.3% in the fourth quarter of 2025. Despite tariffs, political problems and economic uncertainties, Europe continues to show resilience, growing for nine consecutive quarters.
Germany and France expanded at a pace of 0.3 per cent and 0.2 per cent respectively, confounding predictions. Germany has borrowed heavily to invest in defence and infrastructure, and there will be some pressure on to deliver a faster pace of growth in future. Spain’s Prime Minister Pedro Sanchez proudly claimed to be the leading the fastest growing developed economy for a second consecutive year, announcing on X “We are closing 2025 with growth of 2.8%, double what is expected for the Eurozone, and in a strong position to maintain solid growth in 2026”.
Whilst the Eurozone is growing, that growth remains slow. It has been the beneficiary of inflows from money diversifying out of the US and seeking a ‘safe haven’. However, fundamental concerns about the underlying traditional economies, such as German car manufacture, will persist throughout 2026.
As inflation is largely under control and has been around the 2% target for some time, there is little expectation of the rate cuts which other central banks are under pressure to deliver.
Far East
China’s economy has also weathered 2025’s economic storm better than was expected last April, when the first shots of a potentially disastrous trade war were fired. China’s problems aren’t solely confined to tariffs. Structural issues such as an ageing population and a property slump made the 5% growth target a challenge. With so much of China’s wealth tied to property, a downturn in property values will knock consumer confidence, and harm consumption.
GDP growth was running at around 4.8% towards the back end of 2025 with domestic consumption still sluggish and exports continuing to power the economy. Whilst exports to the US were predictably down in the year to November 2025, exports to Africa, ASEAN, Latin America and the EU were up by 26%, 14%, 7% and 8% respectively.
China’s fiscal expansion through bond issuance was huge in 2025, running at around 10% of GDP. It is expected to continue in 2026. Rather than invest in infrastructure projects, most of the funds were used to refinance local government debt, assist the work out of troubled property developers and re-capitalise banks. There appears to be a move away from traditional, big infrastructure investment and towards more targeted support for specific industries such as technology, along with attempt to drive up consumption.
Avoiding more political tension with the US will be difficult but important for future success.
Japan has commanded a great deal of attention with it’s huge bond issuance in January, followed by a snap election called for 8th February. Prime Minister Sanae Takaichi hopes to improve on her coalition government’s narrow majority, and holds an outside chance of gaining a super majority. It is a gamble, but if it pays off the result will most likely be greater defence spending and the implementation of her promised two-year food tax suspension. The result would be pandemic level debt-to-GDP ratios. Markets are keeping a close eye for obvious reasons. Japanese bond and currency markets were both predictably volatile in January.
Emerging Markets
We have already covered much of the potential short term impact on Central and South America in our commentary on the US and Venezuela. Investment in Latin America may be dampened, with Mexico hardest hit. South American countries such as Brazil already benefits from close trading relationships with China, and we may see more consider which superpower offers the most attractive alliance during 2026. Argentina should expect to improve its economy in 2026, following last year’s US financial assistance and gains at the mid-term legislative elections for President Javier Milei.
Indonesia’s equity market was plunged into turmoil on the news that MSCI Inc., the provider of the MSCI Emerging Markets index, could downgrade Indonesia to ‘frontier’ classification and issued a warning that it had concerns over transparency and the limited amount of stock available for trading in listed companies.
Summary
We did say in January that investor patience would be tested in 2026. We didn’t expect so much news in what is normally a quiet first two weeks of the year.
Whilst the politics have been turbulent, financial markets have been surprisingly resilient. They have wobbled and dipped as US foreign policy became increasingly aggressive, but not as dramatically as they might have been. Trump’s detractors have coined the acronym ‘TACO’ – Trump Always Chickens Out – to ridicule the threats which he rarely backs up with action. Whilst the world does not want to fully test this theory, there seems to be an acceptance that his words are not to be taken at face value.
And finally…
Piggy banks have their origins in clay.
The origin of piggy banks comes from “pygg,” an affordable Old English clay used in the 15th century to make household items such as plates and jars. Whenever people had a few extra coins, they would simply drop it into their clay jars which they referred to as a ‘pygg’ bank. As the word sounded so close to the animal the makers eventually made into the shape of a pig.
If this blog has raised any questions why don't we have a quick chat?
MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.