Blain’s Morning Porridge May 6th 2025 – Populism and Crisis. The World Wobbles.
“You are the trailer park. I am the Tornado.”
Markets may become less frenetic now the initial Trump phase is over – but that doesn’t mean they get more stable. News flow and data will continue to show a world changing swiftly, where crisis stemming from US assets (watch Treasuries like a hawk), remains a high probability.
Last week a number of readers were surprised I made some positive comments about how markets may settle now the hurly-burly of Trump’s first 100 days is done. Markets adapt to the madness around them. Expect less panic on whatever Trump says – like his desire to be Pope – but focus on what the real data is telling us…. Believe me… markets are going to remain… “interesting”… in the Chinese sense of the expression.
- From company statements, its increasingly clear Global corporates are pausing long-term investment plans.
- Inflation is set to rise in the US as companies pass on higher costs to consumers, while European prices should fall as China seeks new markets, once again exporting deflation.
- This morning the dollar looks in free-fall in Asia – while that would normally strengthen US exports it is reinforcing fears that de-dollarisation will leave US assets orphaned and expensive
- Friday’s weaker than expected US jobs report strongly hints companies are scaling back hiring plans.
- Shipping feeds (use AIS) show Trans-Pacific trade from China has effectively stopped – expected shipping movements into Los Angeles and Long Beach (which together handle 31% of US imports) are down 33-38% this month.
- A long list of US and European firms are warning of just how badly the current trade chaos will affect them.
- Trade bodies say supply chains frictions could take months to correct…
And just to confirm how bad it’s going to get… according to Torsten Slock of Apollo, the USA is going dark on July 4th this year: 95% of Fireworks in the USA are imported from China.
How did we get here? Hah! This time last year the US markets were thriving. It was the strongest western economy. Today….? Confidence has been rocked. It’s likely to stay that way – progressively eating away much of the premium on US assets. As confidence falls, the most risky asset will be the “safest” – the mighty US Treasury market.
This week the great and the good, (and the usual selection of shysters), will be assembled in Beverly Hills for the Milken Global Conference. (Mostly Americans, but they will still call it Global.) It’s clear there is much Doubleplusgood Groupthink going on – US entrepreneurs giving a positive (read; sycophantic) reception to Treasury Secretary Scott Bessent explaining why it was so necessary for Donald Trump to destroy the trading relationships and confidence of Allies in the USA through his “thoughtfully designed”, “interlocking parts of an engine” approach to tariffs to undermine trade, unaffordable tax cuts, deregulation by DOGE, and why naked venality is so positive.. “I hope you can see the bigger picture now”, asked Bessent.
Based on the numbers of US financiers, bankers and fund managers willing to say positive things about the last 100 days, the view from Beverely Hills must be better than what my computer sees this morning…. Or do you, perhaps, think these talking heads might be making their comments for Trump’s ears…
Time to call a spade a spade… The view is clear… The US needs a reset to make it more competitive, and to correct the over-indebtedness of government and corporates. But let’s not pretend Trump has or ever had a grand plan to fix and repair the US economy… what’s happened has happened, and it was political incompetency 101 – let us call it what it is – at the centre of it.
Sadly, political chaos is not just a USA phenomena.
- Why is the UK’s Reform Party so popular?
- Because they haven’t disappointed the electorate – yet.
Aside from disliking any and all foreigners, I have no idea what Reforms’ wider policies might be. I should not imagine reproachment with Europe is high on their agenda. In Last week’s English local elections they won 31% of the vote, and 41% of the seats. That will give them local responsibilities to oversee budgets and deliver service. But what do they stand for? Do they intend to benchmark their success by the number of hotels catering for illegal immigrants they shut down?
The UK local elections highlight a global problem for western democracies: the escalating dissatisfaction of electorates with the politicians on offer. The nub of the problem is the inability of politicians to deliver, which opens the door to populists willing to promise much more or identify “hot buttons” that will cure the malaise – usually its immigrants.
Meanwhile, decisions made by conventional politicians drown in the glue of bureaucracy and “planning”. Dissent is exacerbated by the speed the media is spun to turn any considered policy announcement into a fundamental assault on freedom, personal liberty and wealth in order to destabilise and fracture leadership.
We’re seeing it in action in the USA where Trump’s executive orders and populist promises look set to create a recessionary shock. The UK’s Conservative Party got away with the absolute dumbf*ckery of Brexit, internal civil war and multiple leadership angles for nearly a decade, because the Labour opposition looked a potentially even worse choice.
We had high hopes for Sir Keir Starmer’s reformed Labour when they took office 10 months ago, but there is little confidence they will even scratch the surface of the lengthening list of failing aspects within the UK economy– trade, the future relationship with Europe, reforming the NHS, rebuilding Defence capabilities, National Infrastructure, housing policy to support the economy’s base, training, wealth creation – you name it. The reality has been a government straight-jacketed inside a fear of markets and its’ own inertia.
The emergence of the populist Reform party became inevitable when characters like Kemi Badenough and Keir Starmer took over their respective parties. What would the electorate expect Prime Minister Nigel Farage to deliver? Something better?
Bluff and bluster perhaps..
Out of time and back to the day job….
Bill Blain
Author Morning Porridge
Founder Windshift Capital
Partner Shard Capital
One Comment
Comments are closed.
Dear Bill,
As usual I have to disagree slightly…
The general public were told by the media (owned by the fat cats who were going to be taxed) that the previous Labour opposition was potentially worse. It wasn’t, but a tell a lie often enough and it can become the truth in people’s minds.
Keith’s “reformed Labour” is actually doing exactly what it said on the tin.
You say that they are “not delivering”. Au contraire.
They are delivering exactly what they promised to deliver which was… more of the same policies that the tories had been implementing for the past 45 years (and yes, I can count).
The clue should have been in the slogan “vote for change” i.e. nothing to see here and we won’t alter a note but please believe the three word slogan and for god’s sake don’t read the empty manifesto!!!
So, is it really a failure of politicians to deliver or a failure to offer anything that might actually change anything?
Or, is the success of Reform an indication that we live in a place where our fellow countrymen will lurch even further to the right given the opportunity?
If it’s the latter is that because we live in a country of racist nutjobs?
Or is it once again back to the knee-jerk reaction of a populace who are ground down by poverty and have been fed lies by the media about immigrants being the cause of all their ills for decades?
Neither prospect is pretty :-(