My last weekly note was way back in January, which, given the markets over the last four months, seems more like four years ago (and I’d argue I now have a few more wrinkles and grey hairs!). In that article I wrote that due to our (regrettable) lack of a crystal ball, we cannot predict anything with certainty, particularly now that Trump is in power.
We still stand by that statement although, I suppose, what we didn’t realise at the time is how volatile both the equity and bond markets would be under his second stewardship of the US. Even first time round, in 2017/2018, when Trump’s favourite word “tariff” was mentioned, equity and bond markets took it in their stride and whilst equity markets fell it was nowhere near the levels we have seen so far this year.
As we well know, Trump is very vocal, whether it be on television, X or Truth Social (which happens to be owned by the Trump Media & Technology Group). What we have seen particularly during his current presidency is that in our ever-connected world, especially with instant messaging, “narrative” does impact markets and can cause heightened volatility.
The impact of “narrative” on markets is not a new phenomenon and plenty of articles have been published on the correlations between the written or spoken word. Historically, it was just a lot slower as the main narrative was via newspapers.
Even just looking at the market last week, the question is, has “narrative” moved the market?
April 8th 2025 – An errant post on X caused a stir in the stock market, showing how influential and unreliable the social media platform can be. Unsourced “headlines” about a potential “90-day pause in tariffs” sent markets into a state of turbulence on Monday morning as investors looked for any indication of a reprieve from the Trump administration’s new levies.
The problem is that the post wasn’t true. Although the White House swiftly denied the rumour shortly after it began to circulate online, the damage was done. Over this period, the Nasdaq initially rallied nearly 5% but then fell over 7% on the back of the potential pause in tariffs being a lie; that type of “tweet” does not help the situation.
April 9th 2025 – Shortly after US markets opened on Wednesday morning, Trump wrote on his social media platform Truth Social: “THIS IS A GREAT TIME TO BUY!!! DJT”. Less than four hours later, he shocked investors by announcing a 90-day pause on additional trade tariffs on most countries except China, sending share indexes soaring. The Nasdaq rallied nearly 12% on the news.
So, even over that short time period you can see how “narrative” has impacted the market. As active managers, this doesn’t make our lives any easier!
Given that Trump is highly unlikely to give up his social media presence, I am not too sure we’ll see any change in volatility anytime soon. While this may be unsettling, it’s important to remember that volatility is a normal part of investing. Though short-term market moves (or unpredictable presidents) may grab the headlines, history has shown that markets do recover.
The upside to this is that volatility breeds opportunity, and our fund managers, whether in the multi-manager range or indeed our blue chip fund, have seen volatility like this before and will be able to navigate this and capitalise upon the opportunities these times present.
