The opening salvos have been fired in a global trade war. And they were big, BOOMING ones.

So what does it mean for investors like you?

Are things going to be as horribly awful as some people are suggesting?

We spoke with Glyn Owen and Andrew Hardy of Momentum Global Investment Management as part of our latest Insider Briefing newsletter to find out. You can watch and listen to our conversation below. (And you can subscribe to the newsletter here, so you get these updates sent to you directly: Insider Briefing Sign-up).

As usual, Glyn and Andrew talk straight and talk sense. If you want a reasoned and calm insight to what the current situation means for your investments and your investment strategy.

NOTE: This call was recorded on 8th April, 2025. Things moved fast after that, but the principles of what Glyn and Andrew say hold true.

How Investors Should Respond to Trump’s Tariff Bombshell — Episode Transcription

[Teresa]
Good morning, hello, good afternoon. Welcome to everybody. My name’s Teresa Evans.

I’m one of the co-directors of Yachting Financial Solutions. We’re all here today to have our regular investment update with Momentum Worldwide. Joining us are Glyn Owen.

Hello, Glyn.

[Glyn]
Hello. Hello, pleased to be here.

[Teresa]
And Andrew Hardy. Hello, Andrew. Hi, Teresa.

Hi there. These are the two chief investment managers of Momentum Worldwide, based in the City of London, the beating heart of London’s financial district. Momentum Worldwide manage a substantial part of Yachting Financial Solutions’ client portfolio as part of their worldwide portfolio of over US$6 billion.

And without more ado, I’m going to fire the tariff word at you, Glyn. Is it good news?

[Glyn]
Thank you for that, Teresa. Well, tariff is the only narrative in town at the moment, and I can’t pretend that it’s good news, because that’s pretty obvious to everybody in the world. You’ve only got to see what’s been happening to stock markets around the world in the past few days since Trump’s momentous statement, which most of us watched live and were sort of shuddering as it went on.

So it is plainly not good news. And I’ll explain why. But the one thing I will say is the markets have reacted very, very quickly.

In other words, they’ve begun to discount what is plainly bad news very quickly. Wall Street, the biggest market in the world, the US market, the S&P 500 is now down about 20% from the peak. And the 20% number is widely regarded as a bear market.

So in a matter of a few days, Trump has managed to tip the S&P 500 Wall Street into a bear market. And the big issue here is that, yes, tariffs were expected. He’d made that very clear in the election campaign.

He won the mandate, so he was going to introduce some tariffs. But the extent and reach of the tariffs he’s brought in, both geographically and by product, are on a completely different level to that which was broadly expected, and way, way different to what he introduced in his first term eight years ago. And the levies themselves, the rate of tariffs, are really huge.

China’s been hit with a 54% tariff rate. 20% was imposed a little few weeks back, and now another 34% in a sort of randomly calculated way. So the way this was delivered, the size of it, and its impact is very significant indeed.

And it’s hard to think that it won’t cause some damage to growth. Because the problem with this is that there are going to be, there have to be some price rises. So in the US, it could well be inflationary.

Quite a few companies exporting to the US will stop. They simply won’t be able to sell anything with big tariffs. You might have seen here in the UK, Jaguar Land Rover has paused for two weeks on selling any cars to the US until they’ve taken stock.

So in the US, it could well be inflationary. And remember, the international supply chains are highly interconnected. So this is not easy to work through this.

So you can see why markets have reacted. It is likely to cause a very significant slowdown in the US and indeed, globally. You know, when the US sneezes, everybody else catches a cold, as we know that from history.

And to think that the UK or Europe or Japan or China will be immune from these problems, that’s sort of you’re in La-La Land. They all will be. There’s absolutely no question.

So everybody’s now revised, including us, revising down our expectations for growth in the US and around the world. It’s likely to be somewhat inflationary, particularly in the US, where prices are going to have to go up of goods that are imported because of these huge levies. And even if incidentally, there are some deals done, we all know that Trump is a dealmaker, he wants to see deals done.

And that may help things. Even if deals are done, it’s very difficult to think that these tariffs are going to be wound back to really quite small, harmless numbers. So we shouldn’t kid ourselves, this is quite painful, at least in the short term.

And it could well result in surplus capacity outside the US, because people just won’t be able to sell into the US. And that is a sort of deflationary environment in Europe and Asia. So there’s some contrast here.

But we shouldn’t kid ourselves, it is not good news. And of course, it has an impact on corporate profits. And indeed, people will be revising down their expectations for corporate profits as we speak already doing so.

So I’m not trying to sugarcoat this, it is bad news, we’re mindful of that. But we do now know the very worst case. It’s extremely unlikely that Trump will come out with another round of tariff increases.

So we know what the very worst position is going to be. And everybody is revising their forecast to take account of that, and markets have been discounting that. And most likely, there will be some sort of deals done.

China has reacted with its own 34% tariff on US imports, which is unfortunate. Europe and the UK are biding their time a little bit hoping to enter, they are clearly in negotiations with the US administration, and hoping to get some sort of better deal. And there will, as the next few weeks proceed, there will be some better news coming out as we get those sorts of deals, we think, we think that’s highly likely.

I don’t think Trump’s intention was to keep these very high tariffs in permanently for all the countries that he’s hit. So things will begin to improve a little bit. And down the track, companies are flexible, they’ll adjust.

We’re already hearing of companies that are going to be increased opening capacity in the US building plant, extending existing plant. JCB, the well known private sector company here in the UK, they’ve already announced they’re going to be extending their manufacturing plant in the US. So they will begin to adjust, they’ll find ways of getting some of these tariff impacts reduced. They will no doubt have to pass some of it on, but there’ll be greater efficiencies here and there.

So don’t underestimate the impact of the private sector, and not every single sector around the world is is caught by this. There are some exemptions. Pharmaceuticals is a good example, for instance. And also the important point to remember is that these are tariffs on goods, not services.

And services are the are the biggest part of most developed world economies. In the case of the US and UK services represent about 80% of the of the economy of GDP. So they’re not affected.

So we mustn’t get completely carried away here. Yes, there’s a slowdown, there’s a there’s a higher risk of recession, but it impacts a relatively small proportion of the economy is a bigger proportion in the developing world. And that’s hit pretty hard by this thing.

But keep, keep that, keep it in perspective. It’s manufacturing goods that are being affected here, not services. And the UK is pretty well, well placed there, incidentally. And so the other thing is that markets have moved very quickly to discount this.

What have we had now? Thursday, Friday today, three days of around about 5% per annum falls in all the big markets around the world. So you’ve had 15% off. So that is discounting a lot of the pain in all of this.

And valuations have clearly improved. If you look through the longer term, companies will come through this. And in a couple of years’ time, we’ll have had the adjustment to to higher tarrifs and the world we will be operating in a different sort of way, less globalization, possibly.

[Teresa]
Yes.

[Glyn]
Maybe an economy that wouldn’t have been quite as big, but nevertheless, still operating successfully. And companies, private sector companies are, as I mentioned earlier, very, very flexible, entrepreneurial, and they’ll find they’ll find a way. And the consumer still the consumer, the consumers has been hit by this, there’s no doubt that both business confidence and consumer confidence has been damaged.

And there are some question marks around the sort of credibility of US policymaking. But nevertheless, the consumer remains pretty in pretty good shape. You know, the labor market generally is good.

The labor market is still good in the US. And here in the UK and Europe, real wages have been rising. So yes, confidence has been hit, a short term damage to the economy.

But we’ll pull through that. And as I say, in a couple of years time, this will be behind us. And you start to say, well, longer term, then you have an opportunity here to buy into markets which have been hit really very hard indeed.

And selectively, there are definitely opportunities emerging, even among the the Magnificent Seven, the well known mega cap tech stocks in the US, they’ve fallen very, very sharply indeed.

[Teresa]
Yeah.

[Glyn]
And, and presenting some some opportunities again.

And the important thing for us, and we’ve seen it, I’m sure Andrew will talk about it. The important thing for us is diversification.

[Teresa]
Right.

Indeed.

[Glyn]
Diversification by asset class, you know, what has done well in this shakeout? Well, bond markets have done well.

Gold has got a little bit of a wobble, but actually, it’s been a terrific asset to own this year. And to us, it remains a really good safe haven. In equity markets, equity markets outside the US have done better than the US itself, because the US is seen as one of the biggest losers in all of this.

So our diversification outside the US has helped. So there’ve been lots of things that have that have been helping. So we have not taken the pain of a 20% fall in in equity markets, we’ve taken some pain, clearly, we don’t quite know how bad it’s going to be till we get the results from today, tomorrow, as it were.

But diversification has really helped. And I think it’s one of the things that’s really vital. And one final thing I want to emphasize before handing over to Andrew, because Andrew will have no doubt, a few things to add to that, is that the uncertainty is really intense.

[Teresa]
Yes.

[Glyn]
It’s created tremendous amount of uncertainty about what comes next. What’s the US going to do next?

[Teresa]
Yes.

[Glyn]
Can I trust the policymaking in the US? How much damage is there going to be?

[Teresa]
Yeah.

[Glyn]
How will other countries react to all of this? And we’re still in the process of seeing that we haven’t seen the Chinese react to date.

[Teresa]
Yes.

[Glyn]
And that uncertainty creates a loss of confidence. And confidence is really vital, of course, for the private sector to succeed. So that’s not helpful at all.

And we need that to settle down. So there’s no doubt that we’ll see volatility still in equity markets for some little while here until we get better clarity. And some people might want to sit on their hands and see how things pan out.

Others will be saying, well, I’ve seen markets down by 20%. And if they come down another 5% or so, that’s a pretty significant bear market. Well, actually, historically, that’s a good time to be putting some money in.

[Teresa]
Absolutely. I entirely agree.

[Glyn]
Excuse me. So we definitely wouldn’t be advocating selling into these markets. I mean, that would be the wrong thing to do.

They’ve already fallen a long way, discounted a lot. This is a time to be patient, to be careful, look for opportunities. At the moment, you’re getting an almost indiscriminate sell-off.

So companies that aren’t necessarily affected by this are getting a lot cheaper. And the one final thing I will say about this sell-off is that I’ve had people today sending me messages saying, is this going to be a liquidity crisis? I just don’t see that.

Liquidity crisis are things that really cause serious problems. Defaults, banks getting into trouble. Banks enter this difficult period in very good shape.

[Teresa]
Well, that’s very reassuring, isn’t it?

[Glyn]
Absolutely. It’s key. And banks are in much stronger shape than the financial crisis in 2008.

They restored their balance sheet health. They look completely different in terms of their balance sheet strength. So I’m not worried about banks.

There may be some people who have caught a cold as a result of this, but I don’t think banks are in any sort of difficulty. And we haven’t seen any more of a big sell-off in banks than across other sectors. It’s been pretty indiscriminate.

So that’s also a good sign. So there are positives in all of this.

[Teresa]
Yes.

[Glyn]
Short-term caution, lots of volatility, but looking for opportunities here to add some equity exposure at a time when, incidentally, the Federal Reserve and other central banks are probably going to be cutting rates more rapidly than the market thought only a week ago.

[Teresa]
Sure. Yes, indeed.

[Glyn]
So with that, I’ll pause. And Andrew, have I missed anything or not covered something I should have covered? I can’t think of anything else, but you will no doubt.

[Andrew]
No, you did very well. I’ll maybe chip in with three short, higher level comments on investment implications. One on just looking at equity market returns.

We were talking about it, Glyn, just a month or so ago in earlier March. If you looked at the US market, the S&P 500 back then, the rolling five-year returns were around about an 18% or 19% annualized return for the S&P 500, which is very high. That’s much higher than normal.

It’s unsustainable at that level. And I think over the last few years, a lot of parts of markets and a lot of investors have become accustomed to that and expected that to continue. But we know that doesn’t happen.

You get volatility, you get these big pullbacks. They’re often actually quite healthy. But it’s interesting to point out, actually, that go back five years from a few weeks ago, that’s back to the COVID lows.

That’s March 2020. And it just goes to show that it’s those points, those points of maximum pessimism where everyone’s, like Glyn said, indiscriminately selling, that creates those great buying opportunities. It didn’t feel like it then.

March 2020, remember, we’re all in lockdown, the world had shut down pretty much. But five years forward, that was a great buying opportunity. So I think worth bearing that in mind to begin with.

Secondly, on the point on fixed income bond market returns. Bond markets are up about 3%, 4%, 5% or so, depending on which one you look at over the course of this year and which day as well, or hour that you look at them. They’ve provided good ballast in portfolios and a bit of positive return because bond yields have come down.

And that translates into a positive return on bonds over and above the running yield. And remember, with US treasuries, for instance, you’re earning about 4% on a 10-year treasury at the moment. So not bad.

It’s a lot better than it was a few years ago. It’s been a poor returning investment over the course of the last few years because bond yields have been drifting higher, prices have been getting lower. But now we’re at a point where that’s reversing and prices are going higher because yields are going lower.

We think there’s room for that to go further and they provide valuable diversification in portfolios. And as we’ve seen in the last few years, really, really valuable downside protection. It’s not going to be a one-way bet though.

As Glyn said, markets over the course of the last week or so in particular have increased their bets on interest rate cuts going forward from here. The jury’s out on that. I mean, these tariffs would be inflationary that they’re pushing up costs.

So there’s a lot of economists out there, investors who worry about a stagflationary environment where you’ve got low or declining growth and higher inflation. And that’s a very bad investment environment for markets. So central banks, the governors, the decision makers are going to face a really tough decision over the course of the coming months, which will be largely data-driven and the inclination I think will be towards supporting the economy, offsetting that big wealth effect that’s come from falling markets and increasing uncertainty by reducing confidence and the like.

But it’s not a sure thing because they do have to generally worry about this inflation side of their mandate. And that’s very uncertain at this point. And on the face of it, could be going higher.

I think on balance, the reduction in yields is right. I think more cuts are likely because I think as things stand, it’s more deflationary than inflationary in terms of the head-on economies and confidence and employment. But thirdly, linking into that is the point on diversification.

And it’s really showing its value during this period. It’s been a tough few years for diversified portfolios, multi-asset portfolios and the like. We’ve talked about it quite a bit on our quarterly calls review.

Our portfolios have always been well diversified, but that hasn’t been rewarded in markets over the last few years. Instead, it’s been a small part of markets, particularly U.S. market, equity markets and tech, Magnificent Seven, the biggest tech companies within that have really disproportionately driven markets the last few years, with everything else being left behind. And we’ve consistently said, you know, that’s not a good idea to put all your eggs in that basket.

Those stocks that have done very well, where valuations are quite high and where there’s a lot priced in or expected already in terms of future growth and a lot of surprises that can come along and can hit that. And you never know what that surprise is going to be. But hey, now we do in this case.

And it’s really pulling the rug out from underneath the valuations. Other parts of markets up until a few days ago were holding up quite a bit better. But still, you know, even with these falls that we’ve seen in Asia and Europe over the course of today and last week, even with that, they’ve held up better than in the US. So diversify within your equity environment. But critically, it’s about now hold other diversifying assets. So that is fixed income, that is gold, that is things like property and infrastructure and the like, things that can be less sensitive to the economic environment and can give you better stability during periods like this. And as we’ve been saying for a while, it’s about it’s about accumulating those when before the storm hits.

And we have been doing that in our portfolios. We’ve got quite high exposure to government bonds in particular, less so corporate bonds, because you don’t think you’re very well paid for that extra corporate risk lately. It’s improving rapidly by the day at the moment, but still not great compared to government bonds, which give you so much better certainty.

And that’s that’s paid off the last few days and weeks. And for instance, if you look up our last performance numbers were up to towards the end of last week and the U.S. market was down close to 10 percent or so for the year to date up until that point. In contrast, our multi-asset balanced and cautious portfolios were roughly flat to slightly up for the year to date over that period.

So it just goes to show how much value there is in that in that proper diversification by not just by geography, but by asset class.

[Teresa]
Yes. OK. I mean, there’s been a lot I just sort of digressing slightly from that.

That was very interesting analysis. Both of you. Thank you.

I mean, there was a lot of prior to this. There was a lot of talk about the AI revolution and how this was going to change everybody’s lives. Now, I guess that hasn’t gone away.

But what’s your take on what’s likely to happen now?

[Andrew]
So it’s still going to happen. It’s still happening. Technology is going to continue improving all the time.

We’ve taken a big leap forward with the rise of generative AI. And I think that’s increasingly going to affect businesses and individuals at home. And we’ll move into the next phase of it, probably where we’ll actually start to make a difference

to businesses beyond the ones that are actually providing the service. You’re going to build in a new layer of actual functions and businesses and the like that are enabled by AI and bring a new layer of productivity or efficiency to older businesses that have got lots of manual processes, for example, or very reliant on call centers or whatever it may be. Things where there’s a big cost attached, where actually they can be automated.

And so I think we’re going to see more of that. I guess the most significant thing in the moment we’ve seen, of course, the last few weeks, as I alluded to, is the sell-off in the Magnificent Seven and the like. So particularly these so-called hyperscalers who’ve been investing so much in building out their AI capabilities.

So the likes of Microsoft, Alphabet, Meta, and the like as well. We met with one of our online investment managers a couple of weeks ago. They pointed out that the investment in US data centers over the course of this year was predicted to be $350 billion or so.

[Glyn]
Yeah, $350 billion. Yes.

[Andrew]
Massive, massive figure in building out more and more data center capacity. And what their analysis showed was that as a proportion of total CapEx of the US economy was about the same proportion, I think it was in the mid-teens or so, percentages as in previous CapEx booms. So the tech bubble and the mainframe 70s boom period prior to that.

And their analysis suggested, look, we’re reaching a peak and that’s going to start to fall off from here. We have started to see that in the last few days as the likes of Microsoft have started to pull back on some of their data center investments. But that euphoria around AI has been driving the boom in demand for NVIDIA chips and GPUs and the like, which are then installed in these data centers.

So yeah, it’s been an unsustainable CapEx boom in that area. It’s going to moderate to some extent. But as with the tech bubble, the rollout of the internet is probably the ideal analogy here.

You had a boom in capital expenditure. You had huge gains in some of the share prices around that of companies linked to that in a short period of time. But it took a lot longer actually for the benefits of the internet and efficiency, productivity and everything to actually come through markets.

And in the end, a lot of those businesses did end up changing the world and becoming part of our day-to-day life. But it takes time. And I think the same is going to happen with AI and there’s going to be winners and losers along the way.

But the underlying technology is going to make a huge difference over time. But yeah, it can be played in many, many different ways in asset classes. And I think it’s going to move to the less obvious beneficiaries quite quickly over the course of the next few years, rather than just being focused on the likes of NVIDIA and those hyperscalers.

[Teresa]
Okay, okay. Anything you’d like to add or anything you think that anything else that you think that we ought to highlight for our clients, Glyn?

[Glyn]
Look, I think the main thing is to stay calm. These sorts of things happen from time to time in markets. Something comes along that’s, well, in some cases, completely unexpected, like the pandemic.

This was partly expected because Trump has clearly flagged it, but it just happens to be more aggressively implemented and more damaging short term than anybody anticipated, hence the knock. And there are now people questioning all sorts of things, becoming very bearish, but it’s a bit late to get bearish when markets have already fallen by 20% and discounted this. Markets are a tremendous discounting mechanism.

So this is not a time to be panicking. We’ll pull through this. There are some concerns obviously about growth, but we’ll pull through it.

And always, always, this creates opportunities.

[Teresa]
Exactly, exactly.

[Glyn]
So if you’re sitting on some spare cash, or you’re looking to put money to work, then opportunities are coming along, as we speak, with these sharp falls and a significant improvement in valuations, particularly with a sell-off that’s now become indiscriminate.

[Teresa]
Yes, absolutely.

[Glyn]
So stay calm, stay invested, and look for opportunities to add to risk in portfolios.

[Teresa]
Okay. Well, look, thank you both very much indeed for your insights. That was very, very interesting and very helpful, I’m sure, for clients.

And if any of our clients out there with substantial investments would like to have a chat with Andrew and Glyn on an individual basis, do get in touch with us, and I’m sure we could arrange something, couldn’t we, Glyn?

[Glyn]
Absolutely. Yep.

[Teresa]
Very good. Well, thank you very, very much indeed again, and look forward to speaking to you later in the year.

[Glyn]
Indeed. Thanks, Teresa. Thanks very much indeed.

[Teresa]
Thank you. Thank you, Andrew. Bye-bye.

[Glyn]
Bye.