February started on a strong note for US financial markets, with an upward trend driven by strong earnings reports and investor optimism about the global economic outlook (principally US). It seemed like the US was prepared for another solid quarter, but that quickly shifted towards the end of February. A correction, caused by concerns over US trade policies, particularly the tariffs that the Trump administration was preparing to impose, led to a negative performance for the month.

The inconclusive, yet long held belief that markets become inefficient in January and easy money can be made could gain more believers this time around. The month ended at +2.93% for the S&P 500, largely above the January average, despite all the uncertainties surrounding the new US President and the various policies he has and will continue to implement.

The year started strong, with running months of strong positive performance, justified by good Q4 2023 corporate results and inflation which seemed to come under control. In fact, by the end of Q1 2024, you could have sold all your equity portfolio and locked in the performance of the annualized long-term return on the equity markets.

By now, it is old news that Trump won the race and will have quasi-unchallenged powers. Indeed, besides the presidency, which he won with a greater margin than back in 2016, Republicans took over the Senate and the House in a so called “red sweep”, showing once again the limits of polls when it comes to predicting outcomes of very polarized elections.

By now, we are all tired about the non-stop coverage and exposure to the US election. Admittedly, it is an important event as it will give a sense of direction to certain sectors depending on who wins the White House. And with the US representing over 72% of the developed World Index (and over 65% even if emerging markets are included), this will ripple around the world.