Blain’s Morning Porridge April 29^th 2025 – Enough about Trump. Worry about the real stuff; Treasuries and Innovation.

“I run the country and the world.”

It’s time to focus back on the real stuff: economic growth and innovation. We need to move past the Trump noise, and get back to opportunities. Which companies offer realistic growth and innovation, and which are hype? The real issue may yet prove to be the US Treasury Market, where doubts are growing.

We worry too much about Donald Trump.

We really should try to just get over him – and let the chaos he generates wash over us. The last 100 days has been extraordinary – and if I’m honest it’s been far too much fun and just too easy to write about the disruption he generates in horror, while pointing out the multiple flaws in practically everything. That said, even Trump’s most hostile detractors in the press admit he oozes charisma and can be charming one-on-one. He would not have captured the venerable Republican Party if he wasn’t.

The thing is – markets are as much about personalities and narratives as they are the dull data about supply chains, demand, supply, inflation and rates. Let’s not lose sight of the fact there is a real world out there – where consumers consume, producers produce, and the global economy will ever remain in a state of constant evolutionary entropy.

Even though Trump, and what he says, has become a fundamental force on how markets are performing, it’s time to dial back on the shock, outrage and bafflement that he and his “posse” of cabinet appointees generate… and get back to the real stuff  about what it all means.

This morning the news is all about how Trump has graciously rolled back the introduction of tariffs on automotive imports. He’s doing it because he faces auto-workers later today, in Detroit, and because the car makers have got through to him on how much damage the supply-chain frictions around parts imports will cause. We can be emotional about it – yet another policy that’s been exposed as a nonsense, or be practical… there will still be damage to the US economy from the tariff announcements, but scaling them back will limit the downside. Does that make US car makers more valuable? Maybe. Does it mean they are less vulnerable? Yes.

To be honest, there are times when I’ve been worried I’m losing sight of the bigger picture because of the Trump minutiae flooding the news!

I shall try to return to writing about real values in global asset markets – which will continue to be about the same old stuff; who is trading with who, how is the global economy evolving, and what comes next? What makes sense, and what doesn’t? What are the risks, and how do macro-economic forces like rates, inflation, demand and supply come together?

We should also note that Trump is a medium-term aberration.  He will be a footnote in history before too long. Timeframes are important – it takes a day out a tech-lord’s or foreign leaders busy schedule to abase themselves in front of Trump, promise billions of new investment in the USA, and since it takes years to actually build anything….. much of it will never happen. There is a lot of smoke and mirrors. Everyone knows that as they dance around Trump’s throne in search of preferment.

I’m pretty sure Trump won’t disappoint is terms of continuing to shock and rile markets. The behaviours of his cabinet will increasingly infuriate real financiers. I am quite looking forward to the stream of insider-trading and corruption scams that I suspect will emerge as they seek “preferment” from their positions. (My money is on Hegseth as the first to be caught with his fingers in the till in a such an obvious way that even Trump will have to sack him – but that’s just me being speculative.)

The stream of policy mistakes and political incompetency out of Washington will no doubt continue to provide simply marvellous material to bluster about. But I will remind myself to focus on writing about what it all means in terms of asset values and reasons to buy/sell. Maybe I will be surprised – maybe we will get stability.

I started writing the Morning Porridge in 2007 – as the global markets drove down towards the Global Financial Crisis the following year. I was trying to alert my then clients to opportunities stemming from the uncertainty generated by asset price moves and banking system instability. One difference between then and now was “common purpose”: around the globe regulators, central banks and politicians were closely aligned and cooperating to craft solutions, rescues and bailouts to stop a gathering crisis becoming a global financial system meltdown. That worries me today.

Today it’s difficult to imagine Trump’s team cooperating with other nations, or the Fed, ECB, BoE, BoJ and Bank of Canada to stem a crisis. (Congratulations to Mark Carney for winning the Canadian election – I hope he will be sending Trump a thankyou note.) In 2008 as the banks wobbled, we recognised the collective solution to the unfolding crisis would be bailouts, and spotted the value in bank debt even before Lehman collapsed. A few year later, (on a live Bloomberg show), I called the buy-moment in European sovereign debt even as other strategists at major investment banks continued to predict an imminent series of peripheral sovereign defaults.

Why did we get it right? Luck or Judgement? Something inside my head just screamed this is the moment based on something Mario Draghi had just said. I like to think it was insight. Maybe it was just luck. We prefer to remember the good calls… (At the other end of the scale is I called Tesla as a sell 8-years ago – I reckoned it a hollow unsustainable shell of a firm based on improbable products, run by a man obviously unfit for the role. The stock rocketed higher and its only now the rest of the market is finally coming around to my earlier assessment.)

Today we have a whole different set of risks to consider – not the least of which is the debt loads of highly indebted nations, and how uncertainty around these will impact markets. I have serious doubts on just how sustainable the USA’s debt load now is, given the policy decisions that have been taken by Washington which have seriously impacted the stability of the Treasury market.

1. Trump has shaken confidence in the USA’s virtuous sovereign trinity of a stable currency, a sustainable bond market, and political competency.
2. He’s alienated allies and competitors alike unnecessarily. His stress on America First policies makes it perfectly acceptable for other nations to abandon common purpose with the USA.
3. Attempts to stem the deficit through DOGE are cosmetic and likely to increase instability than enhance it.
4. Tax cuts are incompatible with addressing the debt load.

Over the coming years I expect to be writing an awful lot about the Treasury market in terms of what the potential end of the dollar-era means, what falling global investment into Treasuries means for rates on the economy, and how that then feeds into higher rates in company formation and growth in the economy.

The issue around the USA is not Donald Trump’s presidency, but whether the USA has the political competency (which has relevance to how effectively the tri-partite system of US governance: legislature, executive and judiciary, can deliver a working solution) over the coming decades to manage its debt, maintain the health of its economy and continue to exhibit the kind of exceptionalism that made it the most successful economy for decades.

Or has the US already past its peak, and the recent surprises in the tech markets, when new competitors from Asia have shown innovation is not a US monopoly, and that they can do stuff better and cheaper point towards a new, new world?

Out of time.. and back to finding a day job….

Bill Blain

Author Morning Porridge

Founder Windshift Capital

Partner Shard Capital