Three weekends ago, investors were counting the losses suffered by their portfolios after two sessions of massive sales due to the famous tariff table displayed by a haughty Donald Trump. Today, those threats are just a memory because the White House, which first strikes and then negotiates, is now in talks with half the world, including China, while rushing to exempt industries that are of interest to the U.S. from the initially proposed tariffs. In short, what was said fifteen days ago, now no one knows what remains on the table beyond uncertainty. And so, making decisions becomes complicated.
The largest fund managers in the country have chosen to be cautious, focusing more on Europe where money is pouring in after years of preference for American technology, and waiting to make significant decisions... because there is nothing worse than not knowing what you are playing with once the game has started. "With this volatility, one can be caught off guard at any moment. The market will not give you any chance to make decisions once you have the information. Caution and gradual movements are necessary because behind announcements and retractions lies an economy with greater uncertainty to operate, with an impact on growth and also on prices (...) It's not a comfortable position, but it's the only one possible with Trump at the helm," says Santiago Rubio, Director of Investment Strategy at CaixaBank AM. In fact, just this week, the International Monetary Fund (IMF) lowered the growth forecast for 2025 by five tenths, to 2.8%, and the cut for the U.S. was up to 0.9 points, to 1.8%. The IMF attributes only 0.4 points to the tariffs announced by Trump, as explained by Pierre-Olivier Gourinchas, the organization's chief economist, because the slowdown in the U.S. economy was already happening before.
Donald Trump took office on January 20 with a bellicose speech that did not go unnoticed by anyone. Jacobo Ortega, Director of European Investments at Santander Asset Management, had already positioned portfolios "more cautiously than usual due to the high level of uncertainties" generated by the U.S. Administration.
"Strategically, it is evident that a scenario with a potential lasting impact on growth, inflation, monetary and fiscal policies, as well as on corporate margins and growth expectations in many sectors is unfolding," admits Jaime Martínez, Global Director of Asset Allocation at BBVA Asset Management. Central banks have intervened in recent weeks, making themselves available to the market in case of a collapse due to what Christine Lagarde, President of the ECB, defined as a moment of "extreme uncertainty." Trump's abrupt statements have been able to push the American fear index, the VIX, to levels not seen since the pandemic, leading to radical market movements far beyond the normal range measured below 2% up or down. For example, on April 4, the day after the U.S. presented its list of tariffs, the U.S. stock market plummeted by 6%. Five days later, on the 9th, the 90-day pause caused the S&P 500 to bounce back by 9.5%. Amid ups and downs, global stock markets have recovered almost all the losses in a three-week crisis unprecedented in history.
"This crisis is unlike any other. It can be quickly resolved by signing a document," say those at A&G private banking. "The real issue is the time it takes to restart the world, the time it takes for people to regain the ability to make decisions that they cannot make now due to uncertainty."
The revolution that Donald Trump has caused in the markets is just the icing on the cake of a soufflé that was already collapsing. The U.S. is no longer what it used to be, especially after the brutal correction seen in the technology firms of the Nasdaq 100. From the peak they reached in mid-February until April 2, the "day of liberation" as dubbed by Trump, the technology index had already fallen by 12%, trying to alleviate the overbought conditions of the previous three years when the "Magnificent Seven" had been the only desired place for investors to put their money. But the made in USA hegemony has come to an end, and money is flowing back to Europe. "We have reduced our exposure to equities, placing it near our historical low range. We made this move recognizing that the so-called exceptional relative growth of the U.S. may have come to an end: we reduced our exposure to the dollar, U.S. fixed income, and equities in our portfolios," acknowledges the Director of Investments at CaixaBank AM, who favors Europe, and he is not alone.
In fact, Rubio believes that the situation could start to reverse after years in which "European and emerging market products had lost significant weight in portfolios," although he sees it as a "progressive" transition.
"The foam has been removed from technology due to the joy, and we have restructured our portfolios accordingly," says Ángel Olea, Director of Investments at Abante, a management company that has taken advantage of the stock market declines to buy back some technology stocks, now at more attractive valuations. Companies with market capitalizations of two trillion dollars, such as Microsoft and Nvidia, and even those with over three trillion, like Apple, are experiencing an average loss of 15% in 2025. In fact, it marks a shift in era that the S&P 500 is experiencing losses compared to the gains in Europe, as it is the first time in years that it is not leading the market.
"We have not changed our investment strategy much from what we saw last year when we already favored Europe and had hedged some exposure to the dollar," something they continue to do, in addition to avoiding high-yield credit (the riskiest) and reducing the duration of their government bond portfolios.
Similarly, Santander AM acknowledges having "reduced exposure to the dollar" in recent weeks. "It is difficult to make structural investment plans without clear rules of the game," and they give themselves another 75 days to better understand what to expect from Donald Trump's new economic policy.
The earthquake caused by the American magnate is clearly evident in the European market, where very few sectors are rising, those where investors have sought refuge: utilities, insurance, and real estate. Large sales have occurred in consumer goods and in travel and leisure due to fears of price escalation following the tariffs. It is worth noting that although the big scare came in April, Donald Trump announced his first tariffs against Mexico and Canada at the beginning of the year, which also never materialized. Since then, the exodus from the U.S. to Europe is also felt in the German bund, whose yield has dropped by nearly 50 basis points from the 2.88% at the beginning of March. The euro has also appreciated by 10% against the dollar and has reached 1.15.
"Trump is so emotional for many that they find it hard to see what he is really saying, but he is very rational and has a plan." A&G maintains that it is better to be invested at all times because otherwise, one misses out on major trading sessions. "Statistically speaking, one should buy into the market because historically, even with Covid, a 20%-25% return can be achieved within six months, and up to 35% within twelve months," they conclude.