Market Thoughts: #WTHelly

My attention is squarely placed on macro and micro drivers that inform how we’re investing. Geopolitics and policy can creep into the risk assessment when they rise to bias animal spirits. Positively or negatively. That said, as an investor what are you supposed to do about it?

It’s remarkable how inflamed geopolitical worries have been met with a market shrug. That’s worth pausing on. Investors are focused on fundamentals. The fundamental outlook—as it relates to the global economy and earnings—is constructive. Productivity underpinning margins. Growth remains supportive. Policy uncertainty matters less to investors when an economy’s in strong standing.

That said, markets don’t really know what to do with declarations coming from Washington. It started with Liberation Day. They keep coming. I don’t think investors are numb to ‘stand and deliver’ taunts and threats being made. They are, however, unsure how to accurately assess the associated tail risk.

The market’s expectations from Washington? Everything is transactional. Initial engagement is based on anchoring – demanding everything to settle on more than could have been gained in a ‘normal’ negotiation. That said, it would be helpful to see the volume dialed down from eleven.

We’re seeing a splintering of transatlantic relationships that won’t quickly be mended. Broken trust is lasting. But that observation, as it relates to markets, seems less pressing on animal spirits. ‘Get while the getting’s good,’ the driving market force. Fundamentals are hard to derail.

Try not to trade geopolitical headlines. That said, negative shocks seem to create more buying than selling opportunities. Not always. Transactional politics work when they’re not escalated to force and ridicule. Then it becomes personal. Pushed too far, that ends badly.

I believe markets are expensive. I don’t believe we’re in an equity market bubble. That’s an observation about calibrating the amount of investment risk you’re taking. Investors generally do a bad job trying to time the market. With hindsight, it’s easy.

But to re-ask my initial question… as an investor, what are you supposed to do about geopolitical risk? You can’t ignore it. That said, emotion has nothing to do with investing. Investors have so far acted rationally, calculating Washington will continue to flex but not break the global economy. We’ll see.

The art of the deal? Foretell a tipping point. ‘Sell America’ makes for a great headline. The reality is that earnings, free cash flow and the health of U.S. corporate balance sheets are the grounding force to current risk-taking. They argue for staying long U.S. risk assets.

In portfolios we are procyclically positioned. We continue to invest across global equity markets. Well-diversified. We are modestly overweight equities and extended credit. We are funding those overweights from core fixed income. We’re neutral duration. Unexciting in an excitable bond market.

Given the state of global headlines, we are better buyers of risk assets should we get a market correction. I’m sticking with my personal investment mantra: steady hands prevail. Try to ignore the best and worst narratives swirling around markets. They’re going to keep cycling.

If you feel you have too much risk in your portfolio, trim some of it back. It will stop you from selling more than you should in a pullback. Most investors inevitably blink. Know your tipping point. For long-term money, stay invested. For traders, make the most of the volatility.

I’m afraid I can’t offer much insight on geopolitics as it relates to the current market. Neither can anyone else, regardless of what they tell you. I do recognize it’s emotionally draining. So much for feelin’ alright? “What the helly” seems a more appropriate rejoinder. #WTHelly?

Unless explicitly stated otherwise, all data is sourced from Bloomberg, Finance LP, as of 01/22/26.

Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. The views and strategies described may not be suitable for all investors.