Blain’s Morning Porridge 15^th January 2026: The End of the Age of American Capital?

“People don’t like change, but make the change fast enough and you go from one type of normal to another.”

Markets are deluged in noise as the President remakes the world. We’re learning to roll with it – but the trick will be to spot the opportunities and gaps that will open. President Trump’s recent demands that US banks and lenders follow his orders is one such opportunity – and may crash a critical component of the US economy’s success.

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There are rumours the American’s used sonic-weapons in Venezuela to leave Maduro’s guards incapacitated. It feels that way in markets these days…

Who doesn’t love the excitement and upside potential triggered by technological progress, constructive politics or positive data? Such times create market opportunities and volatility to trade. Periods of bad news create exactly the same conditions – and can be even more exciting when markets appear to teeter on the edge of cataclysm. I freely  admit the crisis of 2008 was one of the most exciting times I ever had in the markets.

Of course, what markets think they crave is dull, boring and predictable; calm conditions where participants can think, plan and invest for the long term. At the moment, it feels we’re either trading moment to moment between Truth Social Tweets on everything from credit card rates, to Greenland, Iran, or sacking the Fed Chair, amid swirling geopolitical tectonics, or sitting on piles of gold waiting for clarity.

We’ve lost track of the deluge of Presidential announcements and what they mean – they are relentless, hitting the markets in successive waves of angst across trading floors, board rooms and news desks. Many folk ignore them completely – figuring most of it will never happen. I worry about the ones that will.

Unlike 2008 when it was exciting to piece together the unfolding Global Financial Crisis (the GFC) as the steam of consequences came together, the current market is very different. Its long-term. It’s not exciting – its exhausting. While the GFC was a hurricane that swept through markets, caused by the consequences of previous events and bad lending, the current instability feels like a deliberate remorseless battering of news, events and announcements, a storm that’s here till at least 2028! It’s like riding a gale at sea, massive thumping waves and wondering if one of them is going to be snap the boat in two. Tired traders are traders more likely to miss something and make mistakes.

And that might also explain why there has been little in the way of even a hint of a mass sell off, fear or panic on the capricious new flow. Everyone is hunkered down – trying to get through it and getting used to it.

Perhaps the market is too stunned and surprised to take in what the President proposes, or participants are becoming blasé about his announcements. For all the consequences we imagine might stem from the President’s stream of thoughtless consciousness – markets would seem to prefer to be looking the other way, and getting on with the job of trading around it. Markets don’t stop because suddenly things that once made sense no longer do.

Increasingly the President’s comments become part of the noise. Anyone who witters on about “consequences” is increasingly likely to be told to take a chill pill. Perhaps that is the intent. Drown us in noise so we don’t notice how capitalism has been fundamentally overturned.

And the President appears to be winning. One example is tariffs – they have not been the disaster we feared they would be. There has been inflation, but not the tsunami of rising prices we expected would swamp the economy. US companies have adapted. US consumers complain about affordability and worry about their health care bills, but pay for them by taking a second job.

I am finding the lack of market reaction difficult. I’ve spent my career on banking floors or talking to investment desks, where I meet very clever, thoughtful people. Their jobs are to spot consequences and predict outcomes. They will be trying to figure out what the likelihood of potential actions and events will mean for asset prices and valuations, and how best to position and hedge for and against the expectations they form.

As we become progressively more immune to the shocks, and he wins plays like Venezuela, the President may feel he can get away with something a little more shocking each day… Eventually might we shrug and look the other way when he crowns himself and paints the White House in Gold, renaming it Mar-a-Lago North. (Unlikely – Polymarket has Vance at 27% as next president in 2028, and Trump at just 3%!)

But what we’re actually seeing as markets react to the US president’s unpredictability is the business of markets and traders rolling with the noise and regarding it as the new normal. It would seem Trump has mastered the art of being shocking without being destabilising. People are learning to read him – his pattern of threats and then stepping back is well known, and predictable. The fact he’s on the wires again blaming Zelensky for the war Putin started fits everything we know about his method. I doubt Iranians will trust him next time he says help is on its way.

But long term, the markets basis is changing. What we once thought is not what we think now, but we still have to invest. That means changing strategies. Pimco is on the wires this morning saying its “in a multiyear period of diversification away from US assets” because of the unpredictability of policy. Other firms I’m talking to on the Defence Fund, Spitfire Strategic Capital, are reassessing their expectations and making reallocations accordingly. Change does not necessarily happen moment by moment in stock and bond prices, but as long-term shifts.

What I’m picking up is a change in how investors now consider not Trump, but the long-term credibility of the US economy and its institutions as a result. One example is banks – which have had a miserable week in the market following a Trump-Tweet threatening 10% credit card rates. It would be a disaster for banks and consumers, and simply chase sub-prime borrowers towards loan sharks.

But Trump’s anti-banking rhetoric highlights how little he really understand the power of the US economy. The great success, and a critical enabler of US growth and its dominance of global markets for the last 20 odd years, has been the US banks. Ahead of the GFC in 2008, they had become increasingly dominant in global markets, having pioneered innovative new ways to finance capital requirements through Junk Bonds, Securitisation, Sub-Prime – enabling growth and the increasing financialisation of the economy.

That meant the US became the primary source of global capital – able to feed and grow the massive increase in the size, scope and value of US companies through the allocation of a massive capital pile. That’s a primary reason for American Exceptionalism over the last 30 years – access to global capital. The US capital pool is deeper than anyone elses.

In the wake of the GFC US Banks benefited from being swiftly “freed” from regulatory oversight. European banks – which once competed head to head with JPM and Goldman – were kept on very tight regulatory leashes by the regulators. The CFO of a bank I worked for told me he was not managing the bank for the benefit of shareholders, but to please the regulators.

That’s changed the culture of European banking, diminished its appetite for risk, and therefore reduced the capital pool available for European firms and entrepreneurs to create growth from. Its now institutionalised – we’ve had 15 years where a whole generation of new bankers and investment managers have risen into management roles believing the critical roles in banking are in regulatory reporting and compliance.

US Banks avoided much of that nonsense and remained dedicated to the pursuit of fees and profiting from risk – which they did by providing plentiful capital. As a result, financialisation has kept the US economy rolling along at a brisk clip, while European growth remains lethargic and flatlined.

What the US president failed to grasp when he criticised Jamie Dimon’s (head of JPMorgan) comments about central bank independence, and threatened to tell banks what they can lend is how just how much that undermines the reasons for the success of the US, and how foolish it all looks to the global audience.

The president will likely continue to shock and surprise us with announcements and demands, and America will react, while markets become increasingly immune. But the world will become increasingly aware that the end of the American Century is not just the risk of geopolitical tensions and conflict, but the commercial and financial opportunities that will arise as US capital no longer dominates the world stage.

Out of time, and back to the day job..

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital

Special Advisor – Spitfire Strategic Capital