Blain’s Morning Porridge April 15^th 2025: Will US markets become investible again? After we pass Peak Trump

“A house divided against itself cannot stand.”

Content with his supposed win in the Tariff Wars, now Trump is rooting out internal dissent – Harvard being top of his list of target institutions. What next? US Risks are rising and are still not fully reflected in stock or bond prices. Peak Trump is a long way down the road – till then things may get worse.

Funny old time for markets. Everything remains about Trump. He is disruptive and aggressive. He flips. He flops. He claims victory. He walks away content in his own genius. He leaves the market increasingly flustered. If there is a grand plan – beyond posturing, noise, bluff and bluster – please share.

Given all the above, how should you price US risk in today’s fervid, Trumpity-Trump-Trump market? What new fears will the Trump Government raise about the market worth of USA Inc?  What will his next flippity-flop undermine next?

To figure that out, we need to be honest about the US economy. It is bifurcated between the modern very successful tech sector, and the older, post industrial service economy. What little manufacturing there is left in the US exists to service domestic markets primarily – and are large offshore/outsources. To dial that back 50 years is not a step forward! (NSS!)

For years US Tech growth stocks have traded at a massive premium to the rest of the globe – based on a belief in American “exceptionalism” and the mastery of US firms marketing tech to a world dominated by US culture and soft power. Today, the reality is probably that even US Tech firms should be priced at a discount to account for the sheer unpredictability and uncertainty Trump has added to the market mix, and how the sudden decline in the perceptions the world has of the USA will hit profits.

Apple is a great example. The ultimate US preppy product. Its’ whole business is based on selling expensive ‘Shiny-bright new-stuff” to Apple addicts (like myself) with massive margins based on producing them efficiently and cheaply in China – an economy that succeeded by building a fantastic niche for itself as the cheapest-to-deliver manufacturer, mainly servicing US firms wanting to build cheap and sell expensive. Steve Jobs genius was figuring out what computer literate consumers wanted to buy – design, while Tim Cook hasn’t had an original product inspired thought in his lifetime he does understand perfectly the art of supply chains and margin improvement from offshore production.

Today, Apple still trades on 29 times earnings based on Cook’s monetisation of Job’s creations. But, we don’t have a clue how the firm’s numbers will be impacted by whatever new Tariff outrage Trump inflicts this afternoon, tomorrow morning or next week, or the likelihood he will flip/flop again shortly after. We don’t have a clue what the $500 bln Cook has promised to invest in the US will generate in margin driven returns, or when. (Clue, I think most businessmen have figured out to tell Trump what he wants to hear, and then forget about it.) In a more sensible world Apple stock would trade with higher risk weighting based on the Trump dislocation quotient.

What happens to the popularity of Apple products when Trade Wars turn serious? Do you realistically think the Chinese keep buying? Will European’s buy Apple in the future?

Nvidia has also said it’s going to support America First policies by building $500 bln of new supercomputing AI factories in the US creating hundreds of thousands of jobs and trillions of economically secure revenues. Excellent. Good for them. (Funny how $500 bln seems to be the number to make Trump smile.) Are they serious, or did they just say that to make Trump happy and give something to paint as a success? Apparently, they will be making “Blackwell Chips” this time next year in Texas – which sounds unlikely given the track record and timelines of establishing new Fabs outside the established sites in Taiwan.

At the other end of the spectrum are the bulk of US firms – the not-so-much-growth stocks. These are the retailers and sellers of stuff. Amazon, Home Depot and Walmart at the top. They service what the US is – a consumer society.

As for manufacturing… My chum, Professor Mark Blyth of Brown University, was on a New Yorker podcast recently and pointed out Wisconsin has seen more of the jobs its lost in recent years move to Texas (where union smashing is a blood-sport) than were ever “stolen” by the Chinese. US manufacturing is dull, boring but non-predictable because other countries do fundamentals and building stuff better.

The US auto makers are a good example. Since I was in short-pants and my dad drove a very boring Vauxhall Viva, I have never once even considered a car designed or made by an American car-company or its’ European subsidiary. That’s not because I hate America, but because America stopped making buyable cars before I owned my first bike. Every car I’ve ever bought has been because it’s the car I’ve wanted to buy and American cars (except maybe a WW2 Jeep) just didn’t do it. I like Land Rovers, but had a boy-racer VW, my mid-life Aston, a Fiat 500 soft-top that I adore, a Toyota and once, (because I crashed something else), a French car by accident (literally) .. but we don’t talk about that.

I have never even opened a Ford brochure… Have you?

Ford trades on a 7 times multiple – below most other global car firms – perhaps properly reflecting it’s a Local American Car for American Local people.. (Shades of Royston Vassey..) The CEO was on Fox last week saying 80% of its cars are assembled in the US and he wants to make more in the US, which makes perfect sense because no one else is going to buy them. Their current marketing campaign “From America, for America” sums up their global vision.

If America aint making stuff we want to buy… why would we? The Tariff Wars have thus far achieved the square root of nothing positive for the US economy. But they have reinforced the realisation across the ROW that new trade alliances and supply chains are a way forward. And what does the 17% drop in European air travel across the pond, and 25% drop in European hotel bookings in the US tell us about the future?

Not that the American’s care that Europe is no longer besotted with the American dream – a note on Zerohedge said Americans are delighted “European leftists revulsion over Trump” means they are not crossing the Atlantic anymore. Yesterday one of my chums in Washington said she’ll be over in the summer seeking asylum – I’m not entirely sure if she’s joking!

With all these issues hanging over once exceptional US stocks, begging the question how much they are likely to fall if non-US buyers walk away….

Let me pose the Big question: Will we reach peak Trump?

Market folk I was speaking to y’day say there are cheap US stocks out there, new opportunities in crypto (good luck playing 6 bullet Russian Roulette), and Treasuries will be a screaming buy once the Fed gets with the programme. I disagree: US markets can’t meaningfully recover when the underlying forces driving them remain so chaotic and misdirected. I reckon we need this period of strum-et-drang to pass before US linked markets can really stage any meaningful and sustainable recovery – meaning at least 18 more months of further instability.

But Peak-Trump is still a valid question: is it possible a moment is coming up when we just stop worrying, and learn to just ignore the noisy Orange-Monster squatting in the White House? That’s a difficult concept to grasp when talking about the man with his finger on the button. At some point, I am assured America’s political cognoscenti are going to realise it. They will act to stop a deteriorating situation becoming worse – sooner rather than later as the Republican leadership in the Legislature realise the scale of voter lash-back coming their way.

Good luck with that I say.

I have my doubts Trump and his cabinet of dunces can be constrained in any meaningful way… thus things are unlikely to improve in the near term. To be blunt; the Republicans lost control of the monster they enabled a long time ago.

Now that Trump has so conclusively dealt with external trade enemies (ahem!), he’s now focused on the enemy within. Harvard and other leading universities are now under direct threat. The Nimitz Library at the US Naval Academy has been stripped of books the anti-woke warriors of Trumpism object to… “First they smash the windows, then they burn the books…”

We are on Day 85 of Trump v.2, and what has Trump achieved:

• Tariff shocks have destabilised US stock and bond markets – with a global recession threat as a bonus.
• The US economy is going to be hit by inflation and supply chain shocks as the China spat deepens. Trump has left himself no off-ramp.
• Trump’s plans to win a Nobel Prize in Ukraine and Gaza are going nowhere. The discussions with Iran are being kept more undercover.
• Trump’s geopolitical “relationships” with his good friends Emperor Xi and Tsar Vlad have failed to demonstrate any tangible benefits even as he’s pissed off all America’s traditional allies.
• He has picked fights domestically across the USA – immigrants, visitors and now the Universities.

Let me ask it another way. List his successes…

• According to his recently released medical report he’s lost weight and is very fit (because of his golfing victories). I suspect that medical report was… doctored..

Here is Europe we only experience the global effects of Trump. Domestically, I am told there is rising pushback as the MAGA faithful find that Vets, low paid health-workers, teachers and benefit recipients that have been hardest hit by DOGE’s programme of Chaotic budget cuts.

For the economy to succeed, and deliver the growth Trump promised, the economy needs tangible upside. Listening to Trump brag about the global leaders willing to kiss his arse to do deals, how much China is going to pay towards reducing the deficit, or the businesses that are going to set up business in the US… its all sounding increasingly hollow and empty.

Trump does not seem to grasp that an economy is not created by bragging about it in press conferences. To support the jobs he says his art of the deal is bringing to Middle America will require infrastructure, skills & training, affordable housing, sound early education, and health and welfare programmes. The are not optional extras – these are the building blocks the US economy will require just to stand still. They are largely the programmes Musk and DOGE are seeking to restrict by clamping down on discretionary spending programmes.

I fear America gets worse before it gets any better….

Out of time, and back to the day-job…

Bill Blain

Author Morning Porridge

Founder Windshift Capital

Partner Shard Capital