Sometimes you have to laugh. Tariffs have been the cornerstone of Trump’s economic miracle, allowing him to deflect, discombobulate and distract voters from economic truths. Now the NY Fed says tariffs are a consumption tax – even MAGA voters will be worried as the Mid-Terms approach.

The Russians have captured the FT, apparently! The headline that Gilts are about to crash because the Government will borrow more to increase defence spending is Pravda 101. The reality is Gilts should rally on increasing the strategic deterrence that defence spending will create.

Just how thick is the ice? Everything juddered last week – from AI to perceptions of Geopolitics. There are so many take aways. Are markets vulnerable to an AI/Credit Cascade event? How vulnerable are The Middle Nations (J-CAKE). China is a rising risk. Just how well will the USA handle a crisis? Is it time to exit Gold? But go where?

Rising risks, geopolitical positioning, conflict, and strategic compression will be the themes for coming decade. Who will rise, who will fall? What are the implications for markets. Do not expect easy answers. This is unlikely to play out as anyone predicts.

Trump has shattered conventions on politics and diplomacy so why not financial markets as well? The Show Trial of Jerome Powell will see Trump seize the levers of monetary policy. For markets its dead simple – what will it mean for the economy and the rising prospects of a Stagflationary Bust in the US?

Markets have opened strongly in 2026 and seem remarkably sanguine towards rising geopolitical instability and shocks. They’re buying a rosy outlook of rising profits, lower rates and costs, and are blithely unconcerned by the risks of destabilisation from conflict or competition.

Y’day we had yet another Judder Moment for markets as the Fed surrendered to Trump and prepares to juice the markets with renewed QE. Have we learnt nothing? No, I guess we have not. Pretend and keep pretending as we enter the Potemkin Economy era. This will not end well.

There is a lot of noise in Gilts these days. The danger is it derails national confidence – even though much of the clamour is twaddle. The reality is all Governments face challenges, but the UK’s Gilts market is much stronger and more resilient that the right-wing press would care to admit.

The UK survived yesterday’s Pretend and Extend budget. It was a lacklustre soap-opera moment. It won’t cure the UK’s long-term issues or fix Broken Britain. If politicians were serious about repairing the political economy of the UK – it’s time for root and branch surgery on the “frictions” that leave the nation suffering Economic Dementia!

The end of the exceptional American Century is happening faster than we think. America is dispensing with friends and allies, and American Tech leadership is no longer unquestioned. It spells rising instability and threats. Defence has never been more critical as Europe seeks to define its future.