Blain’s Morning Porridge 27th May 2025: Lost in France, A Transformational Storm in Global Markets
“I was lost in France, and the vines were overflowing,”
Global Trade is not just about governments and tariffs. Its about what individuals want to buy and how businesses set about selling their products. How these micro components of the global economy are responding to the “challenges” of Trump v.2 will determine the future.
There are some weekends that just don’t stick to the script! The long bank-holiday in the UK was one of them.
She-who-is-Mrs-Blain and I, together with 2 great friends, raced our yacht to the pretty French seaside resort of Deauville – a race we try to do each year – all good and fine. On Sunday, after the prize-giving, we decided to have “just-one-more” cocktail with chums. Schoolboy error. It got messy. Substantially messy.
We wisely delayed our return by 12 hours. When we set off on Monday morning it was blowing “half-pelicans” in the Baie de Seine. After battering through it a couple of hours and figuring it was only going to get worse, we diverted to Le Harve – where we’re now hunkered down in the marina as a summer gale howls above us.
It’s set to blow till Friday morning! Dang! Lost in France for days! My main regret is I don’t have my painting gear on board – the sea this morning is like something from a post-impressionist absinthe-fuelled nightmare. We’ll just have to take ourselves to the gastronomic market to make up for our disappointment.
Yes, we could have ploughed on through the storm – we would have 10 or 20 years ago. We’d be exhausted, the boat would be beaten up, and we’d probably have ripped the sails. The rest of this week will become a little adventure. We’ll have to figure out how a laundromat works as all we’ve got is sailing gear for 3 days. I’ll be calling clients to apologise, asking for Zooms tomorrow instead of planned meetings in London.
Is being lost in France the end of the World? Nope. Our little dog, Dinner-Jacket, is staying with a friend and is being thoroughly spoilt with the sausages Aunty Emily cooks to order for him.
What was amusing was dealing with French customs and exports. Because our crew did have to get back – they are farmers – they hopped off the boat yesterday to catch the ferry back to Blighty. That meant the full rigmarole of re-entering France, getting new forms signed and recorded, and arranging for the police to stamp our passports. We’ll have to get exit stamps to clear out on Friday morning which involves a lot of standing by to stand by.
Yes, we have a lot of first-world problems this week stuck in Belle France.
A Transformational Storm in Global Markets
Meanwhile, for all the noise out of Washington, the global economy is still cruising full speed into a storm. It will be a transformational storm.
Donald Trump has misjudged both China and Europe – and set in motion a swift re-ordering of how the world works. It’s increasingly possible any new global trade ecosystem that emerges will have a much smaller space for the USA. That has potentially massive implications for global tech innovation, the mythos of American stock exceptionalism, and the future of the US tech mega-stocks. We haven’t seen it yet – but if these stocks stall in the face of new international competition…. That’s why DeepSeek might just have been such a significant moment. Wow… other countries can do AI? Go figure.
There has been much hyperbole around increased global geopolitical tensions, the threat of conflict, and the broken alliances left in Trump’s wake. These are the Macro consequences of the New USA. I suspect they are over-estimated – the global economy will soon find a new equilibrium. However, equally important is the Micro – how individuals respond to the world that Trump has unsettled and destabilised.
Trump’s maximalist trade demands play well to his US supporters, but look outrageous, ridiculous and damaging to the rest of the world. A few nations, including the UK, have engaged and signed “trade frameworks” with Trump’s trade gauleiters, but to understand what the UK really thinks of Trump… look at the praise heaped on King Charles for attending the State Opening of the Canadian Parliament this week. A clearer signal could not be made within the bounds of diplomatic niceties.
Rule one in any business is don’t deal with customers you suspect are going to make things difficult. To be blunt the USA has become a difficult client – and acting a global bully hasn’t helped.
A few weeks ago US Trade Secretary Scott Bessent proudly claimed success and a US/China trade reproachment – but there is still very little actual trade steaming across the Pacific. This isn’t just deliberate trade disengagement ordered by the Chinese authorities – but individual Chinese businesses making a call on the commercial realities of dealing with Trump’s America. They react to the impossibility of making informed business decisions, investments and long-term plans in the face of flip-floppery and volatile decision making in Washington.
In Europe much the same is true. The shock of losing American markets weighs heavy across European businesses – but the response is not panic about lost markets, but how to find new ones and new directions. Businesses might make all kinds of promises about new investment into the USA – but most have little intention of spending money in an economy they can no longer understand. They will smile, say the right things, and wait to see what follows Trump.
Trump – the master of the deal – sees the World in terms of a static-state, and tries to game in terms of “heads I win, tales you lose” plays. Chinese and European businessmen are looking for long-term reliable returns – which means acknowledging the USA market has changed, and identifying where new markets open.
I’ve propped the long-term likely hood of increased Asia/European trade through the new silk-roads and the Middle East. I’ve suggested the emergence of a new Middle Sea (Mediterranean) economy around Europe, North Africa and the Near East. Change is coming.
Trump does not see the big picture evolving around his actions. He fulminates against Europe for its temerity in imposing VAT – which is analogous with US state sales taxes. He is set to play divide and conquer – trying to play off Ireland and Italy against the other states. Europe will continue to take its time, herding the constituent nations into agreement.
What emerges in the future? As commented upon many times in the Morning Porridge, Asia is not just China – nearly half the world’s population live in South East Asia and they are increasingly prosperous. They are going to be wealthier and a more important consumer base than the USA. They include rapidly emerging economies, and established ones like Korea and Japan. Increasingly they deal and trade among themselves.
They are also de-dollarising. China has led the way buying commodities in Renminbi from the gulf. Ultimately, that means money received in Saudi from its oil wealth is invested into Chinese govt bonds rather than just dollar balances going into US treasuries. That’s another critical problem for the US – who is going to fund its budget deficit?
In a world where everyone traded in dollar terms, then it was natural that banks invested the vast dollar balances their clients amassed into Treasuries. How that unravels may be Trump’s ultimate fear – understanding the new reality that Asia is no longer a service and production centre for the USA, but an emerging wealthy economy in its own right which will invest in its own economy rather than fund the USA! What Trump has done is ensure the acceleration of that de-dollarisation process.
The problems in Europe – lackadaisical growth and endemic bureaucracy – are well known. In many ways Europe has only itself to blame for its burgeoning state bureaucracy – unthreatened for 80 years by Pax-Americana, Europe (including the USA) become fat and flabby. How quickly can it change? The impetus given to military spending and growth, and the opportunities in Tech from outside the growth-suppressing US tech umbrella could be extraordinary. Can Europe emerge from decades of closeted nanny statism, and become vibrant again?
The next few weeks are going to be fascinating as US numbers start to reflect the reality of Trump’s first 6 months on the economy… I suspect the weather here in France reflects the likelihood of stormy economic weather to come…
Out of time, back to the day job, from the boat
Bill Blain
Author of the Morning Porridge
Founder Windshift Capital
Partner Shard Capital
