Blain’s Morning Porridge October 24^th 2025 – Call it Chaos, but we sure do live in interesting times..

“You know nothing John Snow…”

Chaos occurs when events break out their usual bounds, and it feels like markets are skirting on the edge! Relax. It’s normal in periods of acute change – as are happening now. The Game of Markets across long, medium and short-term horizons is constantly changing – I guess that’s what makes them interesting!

What an interesting world we live in. It’s not anything like the one I knew as a child, as a student, and a young banker… heck, it ain’t even like the one I knew a few years ago… But it is utterly fascinating… Call it Chaos, but it’s still full of opportunity to do the right thing… or otherwise.

The business of investment is about making the right calls for the long term. The skill of trading is understanding what the herd, the market, is thinking. That’s what all of us in this Game of Markets are trying to fathom each morning… what’s going to happen today, tomorrow and the days after that. Or short, medium and long term investment horizons as we like to kid ourselves.

There are apparently only two arguments to think about when trying to figure it out.. One is: history repeats itself. The other is: this time it’s different. What if it’s a combination of both?

For the long-term, in the History Repeating Itself camp we have the repeating cycle of empires – rise and decline. History shows empires typically last 2 Kondratieff Waves, the K2 Cycle of around 110-120 years. We’re seeing that today as the American Age as Global Hegemon comes under pressure. Give the American’s credit – under their leadership, where the USA was the arsenal of freedom and democracy the entire globe has seen a long-period of general peace, dramatic growth, rising living standards, and poverty diminish.

But all things pass. The last time the Global Hegemon changed the UK dropped down as the USA became the dominant industrial and military power.

The This Time it’s Different issue is it’s not exactly clear who or what will replace it. The Chinese would certainly like the role, but their economy already looks tired and is already showing signs of demographic pressure. For the record, I suspect the Chinese will still try to bluff their way into the role – not with military aggression, but by supporting distraction and trade dominance. A more likely outcome is the World evolves with South East Asia as the global nexus of growth and consumer wealth, which China competing for dominance in that new co-prosperity sphere. (Europe would do well to figure out how to be part of that – as part of the new global trade rails!)

The question for markets is how disruptive the coming changes will be.

Don’t write off America. Give Donald Trump credit – he seems to understand American dominance has changed, hence his move towards America First, a form of American economic autarky by restoring domestic manufacturing and a renewed focus on energy,  his disengagement from Europe and other alliance, and the way he is power-broking a new understanding with what he perceives as the strong nations; China and Russia.

He respects power, because he has a foreboding that the change from global hegemon towards something potentially more unstable as China seeks to dominate South East Asia and then global trade could be profoundly destabilising. He rather the USA remains the biggest fish in a smaller Americas pool.

I would even argue that Trump’s determination to pick a fight with Canada – witnessed by his announcement yesterday that trade negotiations with Canada are over because the Ontario Premier dared to quote the Blessed Ronald Reagan saying Tariffs are a bad thing – is actually the USA trying to establish its new homogeneity over the Americas. Hence Trump’s very mixed and different policies towards Argentina (support), Brazil (threats), Venezuela (make an example of it), and his oft stated desire to own and control Greenland (last part of the America’s jigsaw), actually make sense from the concept of a new Monroe doctrine: The Americas as the USA’s First Island Chain. (Thanks to David Murrin for that thought, and sometime soon Trump will  be asking the UK to give up the Falklands..)

In contrast Europe remains riven. Yesterday was a critical moment. The well-meaning attempt to fund Ukraine with Russian Assets – a very fair argument – collapsed because the Belgians are concerned they could end up on the end of a very sharp legal hook if Russia sues Belge domiciled Euroclear as custodian of these assets. It was a moment when Europe had to agree joint and several liability, a key step towards fiscal union, and make a courageous decision. (Note: courageous decisions are the ones likely to cost you your job.. despite being right.)

Europe just flubbed another test on its never-ending road towards global relevancy. (In the long, long term… perhaps it will happen.)

In the medium term, the picture is very different.  This time it is definitely different, yet doomed to repeat the past. The current markets are driven by money. It is reaching something of a crescendo as markets peak even as fears on how distorted they have become because of debt.

We’ve seen how tech and speculative bubbles have arisen ever since the beginning of time, and especially during the industrial age as each new tech revolution emerged, a succession of railways, autos, aircraft, consumer goods, and then computing and the Tech bubbles of the internet, dot.com, the metaverse and now AI.

Let’s not forget the branch-line of crypto speculation which has led to the nonsense of NFTs, and Memecoins, the hopes for Bitcoin as new money, which in itself has triggered the new confusion on Stablecoins, the next new, new thing everyone thinks they have to pile into.

Clue: stablecoins are not money and they are not crypto, they are just tokens to exchange between the two. They are suddenly a must have investment, even though they have no utility and no return, largely because idiots mistake them for value when all they are is a very convenient way to play large sums outside of regulation.. Again, give Donald Trump credit – he’s seen them as components of his personal pay-to-play path to riches by making his stablecoin part of the game of preferment, witness the pardoning of Binance founder CZ Zhou yesterday.

What has triggered the sheer scale of speculation in today’s markets has been the abundance of easy money. That was already happening before the 2008 global financial crisis, but then became the market’s key driver through the 14 years of QE – where easy money and zero interest rates did not create a massive investment boom into growth through new factories and infrastructure creating jobs, but fuelled massive inflation in financial assets making the rich richer while the poor got poorer, the primary factor that underlies the growth of destabilising populist politics across Western Nations.

That abundance of money is still driving markets today.

In the short-term, we are now – I suspect – in the end game. That’s when the final greater fools enter the markets having watched their remorseless rise in recent months. Smart traders will be watching.

As I cited earlier this week the frothy top is witnessed by issues like the $1 trillion invested into Blackrock by retail which ends up in stock market ETFs and indices. It’s driven by expectations of tremendous wealth still to come from AI, from robotaxis, from robotics. After all, if Elon Must believes it, and he’s going to get paid $1 trillion, then you’d have to be stupid not to follow and co-invest with him? Right? We are back into the 1920s where billionaires rule and wield increasing power.

At some point bubbles burst.. In 1929, in 2008 and maybe again. And that creates a reset. Such moments are painful – especially for the money that loses, but in the long-run are just blips on the charts which will likely still show growth and prosperity in the long-run. Global markets will not disappear in a puff or logic – nuclear flashes would be a different thing, and frankly, why bother worrying about them…

The real question is how long does all this wurble, worble, strum und drang continue? I don’t see it ending any time soon… get used to it, and learn to play it…

On that exciting end point… have a great weekend…

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital