Since mid-June, we have liquidated all global assets except gold.
Global capital markets have undergone a pivotal shift this month. Non-dollar equity markets—particularly in Europe—have experienced a valuation correction, while U.S. markets have remained relatively stable. Oil prices have surged significantly, and gold has held steady. This combination of falling valuations and rising volatility reflects a clear increase in global risk.
Since President Trump’s return to office, “Trump risk” has arguably eclipsed fundamental risks in shaping market behavior. Over the past few weeks, major central banks have entered a key transitional phase. Several European economies have paused rate cuts, and within the Fed’s June dot plot, the number of members expecting no rate cuts this year rose from four to seven. This suggests Western economies are preemptively stepping on the brakes, attempting to slow capital market momentum ahead of looming geopolitical and macroeconomic threats.
Since April, escalating global tariff disputes have disrupted international price mechanisms. While macro fundamentals have yet to show significant weakness, the outlook is deteriorating. A broad consensus is forming: tariff extensions are likely, and the July 9 deadline is unlikely to produce a meaningful reciprocal agreement. Continued tariff uncertainty could deeply impact global inflation dynamics. The U.S. maintains a dominant negotiating position, which remains a key differentiator for American capital markets.
However, this strategy of “constructive ambiguity” may reshape U.S. corporate procurement behavior without achieving its intended goal of large-scale reshoring of manufacturing. Ultimately, the Trump administration must confront a hard choice between the so-called “TACO deal” and real industrial repatriation—an increasingly urgent tradeoff.
Beyond macro and policy variables, the most critical wildcard is the Middle East conflict. War can erupt in an instant, but its resolution is often painfully slow. The current hostilities are evolving into a prolonged war of attrition, with both sides exchanging hundreds of rockets daily, yet neither able to land a decisive blow.
Last Friday, the Trump administration announced it would decide within two weeks whether to intervene militarily. If both sides are already exhausted by then, U.S. entry could be strategically advantageous. Yet a deeper concern looms: as a regional power and symbolic leader of the Islamic world, any unresolved conflict is likely to intensify nuclear ambitions—not just locally, but globally. A conflict that fizzles without resolution only plants the seeds for the next one. If the U.S. does intervene, the conflict could spread rapidly across the Middle East, undermining its broader strategic objectives. Still, Israel’s influence within the Republican Party is considerable. While Washington is unlikely to abandon its global strategy for Israel alone, prolonged regional instability would likely keep oil above $75 per barrel for months. The inflationary impact of this will start surfacing in CPI prints over the next two to three months. For Islamic nations, maintaining a drawn-out but moderate level of conflict may increase their leverage at the bargaining table.
In this heightened volatility regime, our stance remains:
Buy on major dips. Stay sidelined on minor ones.