In the session on Wednesday the US Stock Exchange has finally raised its head after some very difficult sessions, but doubt has now crept into the heads of many investors: given everything that is happening, given Trump's daily excesses, given the uncertainties existing on the star-spangled economy, "what to do with America”? Is it still worth investing in the US or is it better to emigrate to other, safer shores? And if the answer is yes, which ones?
The March 2025 episode of the podcast “On the 4th floor"With Alessandro Fugnoli, strategist at Kairos Partners SGR.
The End of the Western Empire
To describe the current reality, Fugnoli even uses empires and the different stages of their life. “There is a phase – he explains – in which what seemed solid and invincible appears frail and fragile”. It happened with the Austro-Hungarian Empire, with the Ottoman Empire, with the Soviet Union. Well, “in the year of grace 2025,”the Western empire, led by America returns to the United States”, says the economist.
And if what is happening in the last few weeks (Trump has been back in power for less than two months) recalls the parable of some empires, according to Fugnoli "Trump makes you think of those Roman emperors, like Diocletian, committed to stopping the deterioration of public finances or to decentralizing an empire too large to be able to defend it better, even withdrawing from some distant province". A reality clearly visible on the dollar question. The US president, explains the Kairos strategist, "absolutely wants to maintain its role as a reserve currency, but not at the expense of the competitiveness of an America that is trying to reindustrialize itself.'weakening dollar already begun, therefore, will continue and the moments of strength, linked to the announcements of the introduction of new duties, will be used to lighten the exposure".
Also to be scaled down and overturned will be the scheme by which the US injected large amounts of dollars into its economy through the public deficit, which ended up abroad in exchange for products and were then recycled in the American financial market. “With America preparing to save and Europe and China starting to spend, the flows that were directed towards the United States have begun to run towards Europe and China”, concludes Fugnoli.
What's happening on the stock market
The process we have just described also includes: stock valuations “high in America and lower in the rest of the world and, even more so, the positioning, comments the economist in his podcast, underlining that “The world discovers it has too much America in the portfolio, the thesis that technological innovation was an American monopoly holds less than before and everyone is now trying to rebalance the geographic and sector allocation”.
At this point, for Fugnoli, "the only area in which America can continue to do not only well, but also better than others, is that bond”, with long Treasuries likely to outperform Bunds, at least this year.
“An atmosphere of the end of the empire is also a sign of a free-for-all. If until today all the assets in the world moved together, all up or all down at the same time, from now on each will have its own story. In short, it returns, active allocation, which has much more room than before to beat simple passive portfolios.”
The strategist recommends, however, do not overdo it. “Just as the empire is scaled down but not finished, it is unlikely that an America in a bear market will find itself side by side with the rest of the world in full growth,” he says, adding that “if American stocks were to end the year in decline, some negative effects would also be visible on other markets.”
Stocks and Investments: What to Do with America?
This brings us back to the initial question: “what to do with America”? Before arriving at an answer, two factors must be considered: the first is that, despite the uncertainty created by Trump, “there is no reason to assume a recession in the foreseeable future. US growth will be lower this year, probably between one and two percent, but not worryingly so.” Secondly, “technological innovation will continue to come more likely from America and China than from Europe.”
“In short, this seems like the ideal year to be overweight Europe and underweight America, but this does not yet mean that the balance of power has shifted decisively forever,” concludes Fugnoli.
