A new $250 bill has been proposed to celebrate America's upcoming semi-quincentennial, and Donald Trump has a plan to put his face on it. This might be easy to dismiss as yet another example of his overblown ego. But that would be a mistake. If Trump goes ahead, it could undermine faith in what remains the world's reserve currency at the worst possible time.

Trump's allies in Congress have already introduced a law that allows for an exception to the existing rules that no living president can appear on American banknotes. Designs have apparently already been commissioned from the Bureau of Engraving and Printing, which designs dollar bills. There are still plenty of obstacles in the way. The legislation still has to be passed for one, which is never easy, even with a Republican majority in Congress. But even if it doesn't happen, or is delayed beyond the main celebrations, Trump has already decided to become the first living president to add his signature to the notes. What used to be American money is steadily being turned into Trump money.

Trump's $250 bill could undermine the dollar's credibility

That may seem harmless enough. Trump loves the limelight, and what's a few pictures on the banknotes? In Britain, we have always been happy to have the monarch on notes and coins, and the same is true in many other countries. It is not as if we use cash as much anymore, and it is hard to imagine many people will be using the $250 note regularly. But in reality, this is a symptom of something far more serious – a warning sign about the underlying strength of the dollar.

There is a reason central banks have always put weighty historical motifs on their notes. The British have the likes of Winston Churchill and the Duke of Wellington. The European Central Bank has never managed to agree on any real people or buildings – since one member or another would end up taking offence – but has done the best it can with synthesised images of historic building styles. The Bank of Japan has a selection of famous scientists from the country's history. All over the world, central banks choose an image everyone can feel proud of.

There is a logic to that. Paper money is basically a conjuring trick. It is only worth something because we all accept it is worth something, and we are willing to exchange it for goods and services. Reaching into a nation's past is one way of establishing its credibility. It gives paper money an air of tradition and solidity. Without that, there is a real risk people might start thinking it is just a few brightly coloured pieces of paper.

King Dollar is under attack

This is the worst possible time to start taking risks with the US currency. The challenges to the dollar have been growing stronger all the time. The US budget deficits are out of control, running at 6% of GDP even when the economy is doing well, and eventually the rest of the world will get tired of financing those. Central banks globally now hold more of their reserves in gold than they do in dollars, and while that is partly because the price of the precious metal has risen so much over the last year, it is also an illustration of how they are diversifying away from the dollar. China has already launched a digital yuan and is starting to promote it as a serious alternative for settling payments for cross-border trade. The cryptocurrencies led by Bitcoin have had a rough year, but there is little sign they are going away and with every year that passes, they become more established within the financial system, and were always designed as an alternative to the dollar.

The list goes on. On their own, none of those factors might be enough to knock the dollar from its throne as the world's most important currency. But when they all come together at the same time, the greenback is clearly at risk. Like a Latin American strongman, Trump is intent on personalising the government of the US and boosting his own reputation. But if he goes ahead, this may well turn into the moment when the world decides the dollar was not the rock-solid reserve currency any longer and decides to switch to something new. If that happens, the results won't be pretty for the US economy, and Trump may well come to regret his vanity project.

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New Fed chair Kevin Warsh takes the reins of the world's most powerful central bank at a difficult time, says Roger Ferguson for the Council on Foreign Relations think tank. Donald Trump wants easier money, saying, on swearing Warsh in, that “we want to stop inflation, but we don't want to stop greatness”. Trump openly criticised Jerome Powell, Kevin Warsh's predecessor, for failing to cut interest rates. But US inflation is running at 3.8% and has been above the Fed's 2% target for five years in a row. Cumulatively, the price level is nearly 25% higher now than it was in 2020.

Pricier petrol, the fallout of Trump's adventure in Iran, threatens to trigger a new inflation wave. Kevin Warsh may be “compelled to raise interest rates”, which is “precisely the opposite of what Trump had in mind”. Fireworks could lie ahead.

Kevin Warsh will have more elbow room when it comes to cutting the size of the Fed's balance sheet, says Colby Smith in The New York Times. He sees the institution's holdings of $6 trillion in government bonds and other securities as “emblematic of everything that has gone wrong” in central banking since the 2008 crisis. But drawing down the portfolio must be handled with great care. In 2019, a similar attempt to reduce the balance sheet too quickly gave markets a “near heart attack”.

Kevin Warsh must deal with ‘hot’ US inflation

Investors began the year expecting “at least one or two rate cuts”, says The Economist. Now, rate hikes are in the picture. US inflation is “hot”, and the cause is not just oil. Even the core measure, which excludes energy and food, rose at an annualised 3.2% during the three months to April. Central bankers are taught to “look through” energy shocks, which usually prove temporary, but broad-based signs of inflation are harder to ignore. Service prices are rising “uncomfortably fast”. And durable goods – for decades a source of disinflation – rose at an annualised 7.7% in the first quarter of the year. That reflects the effect of both tariffs and soaring prices for computer kit amid the AI boom.

The oil crisis has led to inevitable comparisons with the 1970s, says James Smith for ING Think. In some respects, the similarities are “striking”. Now as then, we face an energy shock emanating from Iran. Now as then, US government spending is unsustainably high. But in other ways we live in a quite different world. Per-capita oil consumption in the UK is 55% lower today than it was 50 years ago. In real terms, energy prices are well below the levels of the late 1970s, when they hit nearly $200 in today's money. Unionisation rates have collapsed since the 1970s and strike action is far rarer than it used to be, reducing the risks of a sustained inflationary surge.

Not that everything is rosy. In some respects, advanced economies face new sources of inflationary pressure that didn't exist in the 1970s. Populations are ageing and net migration is beginning to fall sharply because of stricter border policies. That threatens “shortages” of workers on a scale “with little precedent in the West”.

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The world is in the midst of an oil crisis. The war in Iran has thrown the markets into turmoil, with the price of oil soaring to around $100 a barrel.

The oil shock has repercussions that are far wider than just the price of petrol. In this episode of MoneyWeek Talks, editors Kalpana Fitzpatrick, Andrew Van Sickle, and Cris Sholto Heaton make sense of what is happening now, explain where the crisis could go next, and what you should do to protect your portfolio. Tune in now on YouTube or on most podcast platforms.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Elon Musk is an abrasive and frequently infuriating presence and is the focal point of loathing for the establishment. In the UK, members of the Labour cabinet view him as a threat to the administrative order. Yet he is a living example of the Great Man theory of history; “great” meaning a person of consequence, rather than good. The theory is that a single, determined will can move humanity more than the masses. The modern world would rather fiddle and legislate while Elon Musk seeks to act and solve civilisational challenges.

No number of committee meetings could conjure a Starship booster returning from the edge of orbit. This skyscraper-sized rocket fell through the sky only to be plucked to safety by mechanical chopsticks. A decade ago, this would have appeared only in science fiction, but today it is a reality. This is just one example of the way Musk's maniacal focus pushes the boundaries of the possible. Musk has many detractors, particularly in political circles. But politicians curate their personas to seek approval; people like Musk actually drive progress. History will record the man who caught the skyscraper-sized rocket long after his critics are forgotten.

Elon Musk is dedicated to human progress

Musk was already very rich by the age of 27 after netting $22 million from the sale of his first business, Zip2. The sale of PayPal a few years later made him another $180 million. He was barely 30 and possessed enough wealth to purchase a private island and vanish from public view. Instead, he chose to dedicate himself to “the mission” of human progress. He views wealth as fuel for missions rather than a reward for success.

He founded SpaceX and funded Tesla as attempts to solve humanity's challenges. He viewed the stagnation of aerospace and the slow development of electric cars as problems that required a focused, engineering-based response. By committing $100 million to rockets and $70 million to electric vehicles, he bet most of his wealth that he could solve the problems. He couldn't do this alone, but his willingness to bet big acted as a radical sorting mechanism for recruitment. Elite engineers joined because they recognised a founder willing to risk bankruptcy in the pursuit of a better future.

In 2008 the dream almost ended as both firms spiralled toward collapse. SpaceX had endured three launch failures and could afford one more failure before bankruptcy. Tesla was weeks away from exhausting its cash. Musk was borrowing money for rent while sleeping on factory floors to supervise production. Many would sacrifice one company to save the other, but he refused. Only a contract win from US space agency Nasa prevented liquidation. This helped create a culture in his companies that treats adversity as a mere stepping stone towards achieving the objective.

“Idiot Index”: the key to Elon Musk's success

The key to his success is to focus on what is possible, not what has been done before. Musk operates on the principle that “the only rules are the ones dictated by the laws of physics. Everything else is a recommendation”. His method is to strip a problem down to fundamental parts and then reason towards the goal. Most managers make incremental changes to existing models; Musk rejects precedent, believing the way things have always been done is irrelevant to the way they should be. He applies a metric known as the “Idiot Index” to maintain this discipline. This measures the ratio of a finished product's cost to the costs of its raw materials. A high ratio, such as is typical for space rockets, indicates an inefficient process. Musk expects his engineers to identify the best and worst parts of their systems through this lens at all times. This approach allowed Tesla to cut battery costs and manufacturing time by focusing on the component elements, not simply the price of the finished product.

He puts these principles into practice through five steps. First, question every step in the process and seek out flaws. Second, cut out any unnecessary part or process. Third, simplify or optimise, but only after part two is exhausted so as to avoid optimising a process that should not be there. Fourth, accelerate. Fifth and finally, automate. This sequence ensures engineers never waste effort on perfecting an irrelevance.

The Tesla Giga Press is an example. Traditionally, car manufacturers built underbodies by welding 70 or more separate parts together. Most accepted this complexity because they followed tradition. Musk looked at the simplicity of toy car manufacturing and wondered why full-sized vehicles were not cast as single pieces. He commissioned the creation of the largest casting machines in the world to produce a car underbody in one operation. This eliminated hundreds of robots from the production line and drastically improved structural rigidity. By scaling up the logic of a toy, he proved that a better, cheaper and stronger vehicle could be built more quickly and with fewer potential areas for failure.

Twitter layoffs illustrated Price's Law

The acquisition of Twitter (now called X) and the changes brought about there was an experiment in Price's Law. This states that in any productive domain, the square root of the total number of people involved produces 50% of the results. So in a firm of 10,000 people, 100 individuals would account for 50% of the total value. This suggests that most people in a large workforce are redundant. When Musk reduced the headcount at Twitter by 80%, critics predicted a collapse. They assume that productivity is a function of the number of hours worked by the average employee. Price's Law reveals that productivity is concentrated in a tiny elite.

Price's Law is a counter to Marxian economics, which assumes that the worth of a product derives from the labour time required to produce it, seeing progress as a collective process. Musk works on the idea that you should only employ the real talent. Even then, once an employee is no longer driving the mission forward, they are replaced by someone who will. In X, he maintained the output of the platform while shedding the bureaucratic weight that had stifled innovation. The results were a faster and more feature-rich platform.

The modern Western world is choked by layers of managers managing managers who contribute nothing useful. These individuals thrive on the belief that committees lead to better outcomes. In high-stakes engineering and innovation, however, the many are a burden on the few who actually build. This “special forces” model of management prioritises individual brilliance over collective averages. By identifying and motivating this core, Musk forces a level of productivity that bureaucracies can't replicate.

Elon Musk has achieved orbital hegemony

Musk is perhaps best known for his relationship with Donald Trump or his management of Tesla, but his most impressive achievement is SpaceX. SpaceX has achieved a global monopoly through sheer competence. By 2025, SpaceX was responsible for delivering about 90% of the total weight of usable cargo moved into space. Most of the rest was handled by China. Musk achieved this by refusing to accept the “aerospace welfare state” that had defined the industry. Since the 1960s, firms such as Boeing and Lockheed Martin operated under cost-plus contracts, a system that essentially rewarded inefficiency where the government reimburses all costs and adds a guaranteed fee for profit, ensuring that the longer a project overran, the more the contractor was paid.

Musk set SpaceX's engineers to build rockets that were not just functional, but also economically superior. The result was to go back to first principles on every conceivable part of a space rocket, from materials used, to complexity of design and, most notably, reusability. Before SpaceX, throwing away a multi-million-dollar rocket after a single flight was normal. Musk viewed this as an absurdity, akin to discarding a Boeing 747 after a one-way trip across the Atlantic. SpaceX pioneered the landing and reuse of boosters and has reduced the cost of access to space by an order of magnitude. The Pentagon estimates that this shift has already saved the US taxpayer more than $40 billion in procurement costs.

The difference between SpaceX's “special forces” engineering culture and Boeing's bureaucracy is clear when you compare their passenger spacecraft. Despite receiving billions more in funding, Boeing's programme was plagued by years of delays and emergency technical failures, while SpaceX's leaner team delivered a reliable service for 60% less cost per seat. This performance gap continues to widen. The introduction of the SpaceX Starship V3 is intended to enable full reusability. Each engine generates more thrust than a jumbo jet, while the system is designed to be flown, landed and relaunched with high frequency. Soon SpaceX might render traditional expendable rockets obsolete.

Elon Musk's superpower

Ten years ago, Elon Musk was influential but relatively uncontroversial; his alignment with Trump has since made him a more polarising figure. But this political foray too reflects an engineering mindset rather than a thirst for office. Musk views the US state as a legacy system suffering from bloat. He applied his management process to the federal bureaucracy with characteristic ruthlessness. An initial audit uncovered “zombie payments” worth hundreds of billions of dollars. These funds were being sent to individuals who were either deceased, or, according to government records, not born yet. This foray into public service was only ever temporary and he completed a 100-day contract. His reason for doing it was that he believed it was the right thing to do. He didn't care that alignment with Trump would draw fury.

Musk believes that one of his greatest powers is simply not caring what people think of him. This insulation stems from his neuro-atypicality. Musk, who has said he has Asperger syndrome, tends to prioritise data over social cues; ignoring consensus and focusing on physical constraints, often treating social norms as secondary to progress. In the UK, energy secretary Ed Miliband has branded Musk a “dangerous person” and told him to keep out of this country and its politics. The irony is that Miliband, a man who has spent his entire professional life in non-jobs and a zealous proponent of net-zero, is criticising the man who has done more for sustainable energy through Tesla and SolarCity (yet another of Musk's firms) than any person alive. British ministers talk about some better future, but it's people like Musk who are building it. Politicians can only legislate, they can't magic into existence space-based clean energy (another of Musk's missions).

Let history be the judge of Elon Musk

Musk is a difficult man. We should not expect him to be easy or agreeable, as such traits are rarely found in those who actually change the world. If it were not for people like him dreaming about what is over the next hill, humanity would still be a small group of cavemen huddled together in fear. History will judge Musk by the 250-tonne rocket he caught and the progress he forced, not by the social approval he never sought.

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By European stock market standards, the size of the SpaceX initial public offering (IPO) will be breathtaking. The company is expected to be valued at between $1.75 trillion and $2 trillion, and given how frothy Wall Street is right now, it would hardly be a surprise if it went to a substantial premium on its first few days of trading. We can all question the valuation. The Starlink business that now provides internet access on flights is a clear money-spinner and it may be able to break into domestic broadband as well, but the plans for a colony on Mars look, to put it politely, a little optimistic. Even so, this is a huge business and a very successful one, and it has created a huge amount of value in a very short period of time.

It is far from alone. Anthropic, the company behind Claude AI, is reported to be planning an IPO in October, with a valuation of $1 trillion or perhaps more. Its rival OpenAI, the company behind ChatGPT, is also expected to list later this year, with a value of close to $1 trillion. There are slightly smaller companies just behind it. Last week, Cerebras, which makes AI chips, made its debut on Nasdaq, and after a first-day premium, saw its value soar to $95 billion. On the US market, incredible amounts of wealth are being created at dizzying speed. Anthropic is only five years old, OpenAI is ten (its profit-making unit only five) and although SpaceX was founded in 2002, it only really got going a decade ago.

The contrast with European stock markets is painful. SpaceX by itself will be worth almost as much as the whole of France's CAC-40 (valued at €2.6 trillion and falling rapidly as the value of LVMH slumps). It will be getting close to the entire value of Britain's FTSE 100, currently valued at £2.4 trillion, and SpaceX and Anthropic combined will certainly be worth more than all of the UK's 100 largest companies put together.

European stock markets need more mavericks like Elon Musk

The reason is clear. Very few new firms are being created. If you exclude mergers, the newest company on the CAC-40 is Eurofins Scientific, which was formed in 1987. Even where there are new companies, the best ones choose to list on Wall Street – the Cambridge-based chip designer ARM, for example, is now worth $220 billion, which would rank it as the third largest in the FTSE 100 if it had decided to list here.

Europe, including the UK, needs to realise how far behind it has fallen and start working out how to turn that around. First, it should radically reduce the taxes on start-ups to encourage more entrepreneurs. Britain has scaled back the break on capital-gains tax that anyone who started a new company used to benefit from, and most of Europe never had any concessions to start with. Instead, there is a constant stream of new wealth taxes and capital-gains taxes, with the Netherlands extraordinarily planning to tax capital gains before they have even been cashed in. No wonder there are far fewer start-ups and hence fewer giants ever emerge.

European stock markets should also roll back restrictions on growth industries such as AI and space. While the US has a booming space industry, Europe has a Space Act; while huge new AI businesses are created on the other side of the Atlantic, Europe is stuck with an AI Act. But there is no point in having a regulator if there isn't an industry to make rules for. There is still little sign that politicians in either Brussels or London realise how much damage has been done by trying to regulate industries before they have even begun.

Finally, Europe should relax the listing rule for entrepreneurs such as Elon Musk who want to keep control of companies. SpaceX will come in for a lot of criticism for allowing Musk so much control over the business and the $1 trillion pay package if he manages to create a thriving human colony on Mars. It doesn't follow Europe's governance rules. But so what? Entrepreneurs are often a little odd, and they are often control freaks, but they also have the drive and ambition to create huge new businesses. Europe could use fewer rules and more mavericks if it is to avoid turning into an investment backwater, with nothing more than a dull collection of very old companies.

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Donald Trump has sworn in Kevin Warsh as the new chair of the US Federal Reserve, replacing Jerome Powell, in what was supposed to be the big monetary policy event of the year. Kevin Warsh, like all of Trump's preferred candidates for the Fed's board of governors, has sounded very keen to cut interest rates. Assuming that he was not simply paying lip service to the president's wishes in order to win the nomination, that would mean huge pressure in the Fed for aggressive easing. Yet it is no longer so clear that the change of chair will matter much.

The Middle East crisis has changed the calculation. Markets are now pricing in interest-rate rises rather than cuts, while longer-term bond yields are rising again. Of course, a central bank that is determined to slash short-term interest rates could ignore fears about inflation and cut regardless. It could also try to control long-term yields by buying up longer-dated bonds. But in this environment, it is far less likely that Trump's appointees will be able to shift consensus among other board members towards much looser policy. Nor is it obvious from his own record that Kevin Warsh will be quite so dovish for now, notwithstanding his frequently expressed view that AI will usher in productivity gains that justify structurally lower rates.

Interest rates are not Kevin Warsh's biggest problem

All else being equal, easier policy would have been even more bullish for already-exuberant stock markets, especially in the US. Yet investors have not been behaving as if policy was too restrictive anyway.

Note how strongly markets have risen with interest rates where they are. Short-term rates at around 4% and longer-term rates at around 5% only look high by the abnormal standards of the 2010s.

So the real risk to markets is not that interest-rate cuts don't come. Instead, it is the hard reality of where fears about inflation are coming from: the disruption to energy supplies. Every week, markets trade as if the crisis will be resolved; every week, we see no solid progress. If this finally starts to catch up with the real economy – which could happen in early June, some analysts reckon – the Fed's decision to tinker or not to tinker will quickly become irrelevant.

A date for your diary

The first of the twice-yearly Mello conferences for private investors takes place next month, on Tuesday 2 and Wednesday 3 June in West London. This event always features an interesting line-up of several dozen companies and funds presenting to existing and prospective investors: one of the highlights in last November's event was Seraphim Space, which has been the star of the investment-trust sector this year. Mello is offering MoneyWeek's readers a 25% discount on tickets – go to melloevents.com/mello2026 and use the code M26MW25 to book.

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What force will shape the world in the next 20 years? The answer is China's drive to financialise, according to Diana Choyleva, founder and chief economist at Enodo Economics.

In this episode of the podcast, Diana speaks to MoneyWeek's Cris Sholto Heaton about how the AI race differs in China versus the West, the transformation of the country's equity market, and the breakdown of globalisation.

You can watch this episode on our YouTube channel or subscribe to it on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Bank stocks were hit hard by the 2008 financial crisis. Years of heavy borrowing left many banks exposed, and some of the most trusted names collapsed. Investors faced huge losses as governments stepped in with taxpayer-funded bailouts. In response, regulators introduced strict new rules to prevent a repeat. These measures weighed on profits for years, but the sector has now come through that difficult period. Today, banks are much safer than they were before the crisis. Big investors have returned, helping to push up share prices; some have even tripled in recent years. As valuations edge back towards more normal levels, an important question remains. Do these high-yielding stocks still deserve a place in a portfolio, or have the easiest gains already been made?

Bank stocks’ wilderness years

For more than a decade, the banking sector struggled to regain the confidence of investors. Most professional fund managers suffered significant losses in the 2008 crash and subsequently found the industry difficult to navigate. Investors discovered they lacked understanding of complex balance sheets. Consequently, their appetite for banks' shares vanished for a generation. Even today, many professional investors remain wary because they find the internal mechanics of a global bank difficult to decipher.

While investors remained cautious, regulators rebuilt the global financial architecture. There has been a substantial increase in banks' capital, the cushion that stands between bank assets and insolvency. Core capital ratios, which give the size of this cushion expressed as a percentage of the bank's total risk, were as low as 4% pre-crisis; today, they often exceed 15%. In the UK, the Vickers Report mandated a separation between retail and investment banking operations. This altered the nature of the business and kept valuations low.

Jamie Dimon provided the first credible signal that this era of stagnation was ending. In February 2016, the chief executive of JPMorgan Chase invested $26 million of his own money into his bank's stock. He purchased the shares at roughly $56 per share, which aligned with the company's book value at the time. Dimon realised that the regulatory clean-up was largely complete. He saw an institution that was well-capitalised and undervalued, yet still priced as if it was ruined. His investment marked the start of a decade-long rally that eventually saw the stock price rise more than fivefold. It would take several more years and a radical change in the interest-rate environment for the rest of the market finally to reach the same conclusion.

The return of inflation

The stagnation of the previous decade ended with the return of inflation. Central banks tackled inflation by raising interest rates from near-zero to 5% and, with that, the fundamental engine of banking profit returned to health. This engine is the “net interest margin” – the difference between the interest a bank pays to its depositors and the interest it receives from its borrowers. For years, the industry struggled to generate a decent return in a world where interest rates were near-zero. The shift to higher rates boosted profits.

How much banks paid their depositors played a big role in this windfall – that is, how much of a central-bank rate rise was passed on to savers. When rates went up, banks were slow to increase interest on current accounts. At the same time, they quickly raised the cost of mortgages and business loans. This delay helped to boost profits. In theory, this rise in profits should only be temporary. But it made it easier for a bank to manage future earnings through a “structural hedge”, allowing them to lock in interest rates for several years and smooth profits as rates fall. The result is a more stable and predictable income stream. This improved profitability has transformed how banks manage their capital. After a decade of hoarding cash to satisfy regulations, they are now paying a lot back to shareholders via a mix of dividends and share buybacks. Total shareholder yields, combining dividends and buybacks, now often exceed 10% a year.

Strong recent results from the biggest banks have cast doubt on the idea that upstart digital challenger banks will disrupt them. While the challengers achieved high user numbers and launched attractive software, they lacked the massive and low-cost deposit bases that the traditional banks enjoy. The incumbents used their superior cash flows to adopt the best elements of the digital revolution, investing billions in their own platforms while maintaining the trust and regulatory licences required to dominate high-value lending, such as residential mortgages.

The established banks were also better able to absorb the higher costs of regulation and cybersecurity. For a smaller challenger bank, the compliance burden is often a significant percentage of its total revenue. For a giant bank, it is a manageable operational expense. Some challenger banks, most notably Revolut, have grown to a large size, but the biggest effect of the new banks is a forced modernisation of the older ones.

This combination of rising margins, disciplined shareholder returns and the resilience of the established model has restored the sector's momentum. The banks have demonstrated that they are no longer just safe utilities. They are profit-seeking enterprises with the capacity to deliver high yields to patient investors. The current challenge for investors is to identify which institutions can sustain this performance as the interest-rate cycle matures. The market has recognised the recovery, but the divergence between the winners and the laggards suggests that selection remains critical.

How to navigate the banking market

There are at least three distinct types of banking. Retail banking is the familiar world of the high street, managing residential mortgages and personal savings for millions of customers. Corporate banking offers services to the commercial sector, extending credit to firms and facilitating international trade. Investment banking is a more volatile endeavour that involves mergers, debt issuance and investing in the capital markets. The latter depends on the shifting appetites of the financial markets, which introduces a level of unpredictability that many investors find unsettling. The market typically rewards the steady stability of retail lending with a higher multiple, while it views the inconsistent profits of investment banking with caution.

The main concern for investors is the progression of the interest-rate cycle. Banks generally benefit from rising interest rates because the income they generate from loans increases more quickly than the interest they pay to depositors. However, as rates plateau this advantage often diminishes. Customers eventually move their money from low-interest current accounts into higher-yielding fixed-term products. This shift increases the bank's cost of funding and can lead to a lower profit. Asset quality is another area of vulnerability. Extended periods of high borrowing costs can put pressure on both households and businesses, leading to a rise in loan defaults. The commercial real-estate sector is currently viewed with particular caution, especially in markets where office and retail property valuations have fallen. If a bank has a high concentration of lending in these areas, it may be forced to raise its loan-loss provisions, which hurts profits.

Political and regulatory risks are also a factor. Governments may consider windfall taxes on high bank profits during hard times. Regulators often introduce new rules on capital requirements or consumer protection. Such measures increase operational costs and limit the amount of cash that banks are able to return to shareholders through dividends and buybacks.

Finally, structural shifts in the financial system present long-term challenges. The rise of non-traditional lenders and private credit markets has introduced new competition for corporate lending. Furthermore, the development of digital currencies could alter the traditional deposit-taking model. If consumers begin to hold significant portions of their wealth in digital sovereign currencies rather than bank accounts, the industry's funding costs could rise substantially.

To assess a bank accurately, investors must look past the price-to-earnings ratios used for ordinary companies. Instead, they prioritise the price-to-tangible-book-value ratio. This metric compares the share price against the net value of the bank's hard assets, once intangible items such as goodwill or brand value are stripped away. It provides a realistic view of the bank's worth if it were liquidated today. A bank trading at a discount to this figure suggests that the market believes the management is failing to earn its way, or that the assets on the balance sheet are not as safe as they appear. Conversely, a premium indicates that investors expect the institution to generate superior returns for years to come. In this new higher-interest-rate environment, investors must distinguish between high-quality cash machines and potential value traps.

The efficiency leaders of the banking industry

JPMorgan Chase (NYSE: JPM) remains the undisputed benchmark for the global banking industry. It is the largest bank in the world by a significant margin and is valued at more than double its nearest competitor. This scale allows the firm to simultaneously dominate both investment banking and retail lending. Under the leadership of Jamie Dimon, the bank has maintained a return on equity of nearly 16% while investing billions into its technological infrastructure. While the valuation is high compared with peers, its operational dominance and so-called “fortress balance sheet” provide a unique safety net. It is the go-to investment for those who wish to gain exposure to banking.

Lloyds Banking Group (LSE: LLOY) is a direct bet on the British economy. Unlike its more international rivals, Lloyds Banking Group generates the majority of its profit from domestic retail and commercial lending. Its net interest margin has improved significantly in recent years as it benefited from the shift in interest rates. With a price-to-tangible-net-asset-value ratio of 1.5 times and a healthy return on equity, the bank has become a favourite for dividend-seekers. Its aggressive share buyback policy continues to support the shares even during periods of domestic economic uncertainty.

HSBC (LSE: HSBA) has focused its efforts on the high-growth markets of Asia, which now drive the majority of its earnings. The bank trades at 1.7 times tangible net asset value and delivers a return on equity of 13.7%. For the income investor, the appeal lies in consistent dividends and regular share buybacks. However, the heavy exposure of HSBC to Hong Kong and mainland China remains a double-edged sword. These regions offer superior growth potential, but also introduce geopolitical risks.

NatWest Group (LSE: NWG) has completed its journey from a government-controlled institution back to a fully private enterprise. Many investors will remember the bank as the Royal Bank of Scotland, which rebranded to distance itself from the reputational damage suffered during the 2008 crisis. The bank has shown remarkable profitability recently, with a return on equity approaching 20% in its most recent results. The shares trade at a more modest 1.3 times tangible net asset value, offering an attractive entry point for those seeking exposure to banking. Its focus on digital efficiency has allowed it to maintain a competitive edge.

The recovery candidates

Barclays (LSE: BARC) trades at a discount of 0.8 times to tangible net asset value, despite delivering a return on equity of more than 10%. The market remains cautious regarding its large investment-banking division, which requires significant capital and produces volatile returns, but management recently vowed to return substantial capital to shareholders by the end of this year. If the bank can prove its investment arm is no longer a drag on the retail business, the potential for a valuation re-rating is substantial. It remains an interesting candidate for those looking for value and who are comfortable with higher risk.

UniCredit (Milan: UCG) has emerged as one of the most efficient banks in the eurozone. Under a disciplined management team, the Italian giant has achieved a return on equity of nearly 17%, far outstripping many of its domestic and international peers. It trades at 1.5 times tangible net asset value, reflecting a market that has finally begun to appreciate its streamlined operating model. By aggressively cutting costs and returning capital, UniCredit has proved that a European bank can thrive without the tailwinds of a massive domestic mortgage market.

Deutsche Bank (Frankfurt: DBK) has historically been the sick man of European banking. After years of losses and scandals, the bank has finally returned to consistent profitability, posting a return on equity of 9.2%. Reflecting this, it remains one of the cheapest major banks in the world, trading at just 0.7 times tangible net asset value. The discount is due to its poor reputation, but the structural improvements in its corporate and private banking arms are undeniable. For the patient investor, it represents a bet that the final stages of its turnaround will lead to a revaluation.

The specialists

BNP Paribas (Paris: BNP) is the closest institution Europe has to a diversified American-style giant. It operates a massive corporate and investment bank alongside a stable retail presence across several countries. Trading at 0.9 times tangible net asset value, it offers a diversified stream of earnings and a healthy dividend yield. The bank has successfully used its scale to gain market share as American rivals pulled back from certain European markets. It is a solid choice for those who want exposure to European growth without the concentrated risk of a single-country lender.

Banco Santander (LSE: BNC) has exploited its unique geographic footprint, spanning from Spain to Brazil and the US, to protect itself from regional economic shocks. The bank trades at 1.7 times tangible net asset value and delivers a return on equity of more than 12%. Its diversified model means that when the European economy slows, its Latin American operations often provide a profitable cushion. This geographic spread is its greatest strength, although the complexity of managing such a diverse empire often leads to a slightly lower valuation than its simpler peers.

Standard Chartered (LSE: STAN) provides a unique way to gain exposure to the emerging markets of Asia, Africa and the Middle East. Unlike HSBC, it has a smaller retail presence and focuses more heavily on corporate and institutional banking. It trades at 1.1 times tangible net asset value and has recently exceeded its own profitability targets. It is a primary beneficiary of the rise in intra-Asian trade and is well-positioned to benefit from the ongoing economic development in its core markets. It remains an attractive option for investors looking towards the emerging economies.

Bank of America (NYSE: BAC) is the second-largest lender in the US and serves as a bellwether for the US consumer. It trades at 1.8 times tangible net asset value, a premium that reflects its massive deposit base and its leading position in digital banking. While it is highly sensitive to US interest rates, its diversified earnings from investment banking and wealth management provide stability. It is often seen as a more conservative alternative to JPMorgan Chase for those who want exposure to the American financial system.

Goldman Sachs (NYSE: GS) remains the premier investment bank in the world. Unlike the universal banks, Goldman Sachs is heavily weighted towards merger advice, trading and asset management. This makes its earnings more volatile and dependent on the health of the financial markets. After a period of strategic drift into consumer banking, the firm has refocused on its core strengths. It remains an option for those trying to gain exposure to pure investment banking rather than more traditional lines of business.

The best bank stocks to invest in now

The banking sector has transitioned from a source of risk to a reliable engine of shareholder returns. For those seeking stability, Bank of America offers a good balance sheet and direct exposure to the US economy. Its historical resilience provides a degree of security for investors prioritising long-term capital preservation. Barclays represents a more opportunistic choice. It remains priced at a discount compared with its domestic peers, and the successful execution of its current strategy should allow this valuation gap to narrow, rewarding patient holders. Finally, Standard Chartered serves as a unique vehicle for those desiring exposure to emerging markets. As a UK-listed entity, it provides a regulated gateway to high-growth regions in Asia and Africa.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

What are prediction markets?

Prediction markets are online peer-to-peer exchanges that let users wager money not just on sports and politics, but on everything from the chances of a full US ground invasion in Iran to what colour tie Donald Trump will wear on a particular day. The two biggest sites, Polymarket and Kalshi, have exploded in popularity over the past two years, as US federal regulators have taken a far more relaxed approach.

Trading volumes on the two sites were $50 billion in 2025, up from $16 billion the year before, and are set to be many times that this year. According to analytics firm The Block, cited by The Wall Street Journal, trading volumes on the two leading platforms rocketed to $24.2 billion last month, up from $1.8 billion a year earlier. Donald Trump Jr is an adviser and investor in Polymarket, and Trump Sr's media company is planning its own site, Truth Predicts. Meanwhile, several US states are suing the firms on the grounds that they facilitate illegal gambling.

Are prediction markets risky?

Betting on events that might or might not happen is obviously wide open to people taking advantage of inside information and/or seeking to influence events. Last month, a US soldier was the first person to be charged with insider trading on prediction markets. Gannon Ken Van Dyke is charged with using classified information to place roughly 13 bets worth $33,034 on positions including “US Forces in Venezuela” and “Maduro out”.

The sites claim they serve an important wider function in terms of price and information discovery – indeed, the Federal Reserve, no less, recently published a paper finding that Kalshi's market participants did a usefully good job of predicting changes in interest rates and GDP. Polymarket says it “aggregates wisdom from informed users, often outperforming experts”. But if those users are too “informed”, it stacks the deck against the rest of the players. Exactly how “informed” a user is permitted to be before they are doing something illegal is a question that's certain to play out in the courts many times in forthcoming months and years.

Are prediction markets allowed in the UK?

In theory, both Polymarket and Kalshi are regarded as unlicensed gambling sites by UK authorities and are blocked to UK-based users. In practice, there are routes (involving VPNs and cryptowallets) available to those who wish to bet. This week, the site was offering 20 different markets related to the local and devolved government elections in the UK, including mayoral elections. Unless an awful lot of Americans have developed an unlikely expertise in Britain's local politics, it seems probable that the “informed users” in question are UK-based.

How do prediction markets work in practice?

The principle is similar to sports-betting exchanges, in that prediction markets involve peer-to-peer betting (or “trading” for those who fancy themselves as pros) rather than betting against a bookmaker. On Polymarket and its competitors, unlike a conventional bookmaker, the house doesn't set the odds: it facilitates a peer-to-peer exchange – all bets are binary Yes/ No – and takes a fee.

At the time of writing, Polymarket is offering a market on what the highest temperature will be in London on 7 May. A high temperature of 16˚C is priced at 39 cents, meaning the market of interested punters thinks that there's a 39% chance of that event happening. If you bet Yes – and get it right – you get a dollar, and have made 61 cents profit on each 39 cents you stumped up.

Can you trade your position?

Yes, you can sell out of either winning or losing positions before the event is resolved – and most users do just that. Say you buy Yes at 45%, and it moves to 55% as people think it's becoming more likely. You can cash out early and make a smaller profit of 10 cents. This is an important point in terms of market manipulation and abuse by insiders – you don't need to win your prediction to make money, you simply need to move market sentiment and cash out. On 9 April, for example, the official temperature recorded at Charles de Gaulle airport jumped suddenly before falling back. The spikes were due to suspected tampering with sensors and coincided with suspicious bets on Polymarket, with hundreds of thousands of dollars in play.

Do prediction markets facilitate corruption?

It appears so. According to analysis by the Anti-Corruption Data Collective, a non-profit research and advocacy group, more than half of “long-shot” bets on military action made on Polymarket – defined as wagers of $2,500 or more at odds of 35% or less – are successful. That suspiciously high average win rate (of 52%) compares with just 25% in politics and 14% for all long-shot markets. The day before the US attack on Iran on 28 February, 150 people made trades of at least $1,000 predicting an imminent strike.

The risks go beyond insider trading, says Sam Freedman on Substack. “The more lucrative these markets become, the more predictions about the future will affect decision-making and behaviour” – and the more public trust will erode as misinformation aimed at manipulating markets becomes widespread.

Should you have a punt?

For a bit of fun, maybe. As a way of making money, probably not. The Wall Street Journal finds that 70% of users lose money and that 67% of all profits on Polymarket go to just 0.1% of accounts. “Casual traders are bleeding cash while a small number of sophisticated pros – including trading firms with access to vast streams of data – eat their lunch.”

Separate analysis by Charles Martineau, a professor at Toronto, came up with similar results. His paper concluded that 69% of Polymarket customers lose money, while the top 1% captured three-quarters of the profits. On Kalshi, too, the large majority of users lose money, with 74% of accounts unprofitable over the past month (on the firm's own figures). Good luck beating those odds.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

At Janus Henderson's North American Income Trust (NAIT) we focus on US income stocks – quality franchises that consistently generate cash and have disciplined capital-allocation policies focused on investment in the business to sustain competitive advantage while paying a progressive, covered dividend. Surplus cash beyond this may be used for bolt-on mergers and acquisitions, or to repurchase shares when the stock is dislocated from long-term assessments of fair value. The NAIT has a strong record of paying a progressive dividend and growing revenue reserves since the fund's inception in 2012 (it was converted from the Edinburgh Tracker Trust). The average dividend in the portfolio is 3% and dividend growth averages an attractive 6%-7%.

Our revenue reserves can comfortably cover one year of payouts and may be used if needed. However, there was only one small dividend cut during the 2020 pandemic period and none since then. Many UK investors may not automatically think of US income stocks, but there are several that offer attractive and growing dividends. The US has a history of superior earnings growth, which can often translate into higher dividend growth, too.

How to gain exposure to US income stocks

Dell (NYSE: DELL) is a technology infrastructure company uniquely positioned to grab a slice of the next wave of corporate spending on AI applications. Its scale, global supply chain and deep relationships with customers from the private and public sectors make it a preferred supplier of AI servers and data-storage technology. As enterprises move from experimentation to deployment, Dell will benefit from recurring technology update cycles. Growing profitability is supported by the company's shift toward higher-value technology infrastructure and its disciplined cost management. Debt has been cut and capital returns support the yield. We believe Dell's valuation fails fully to reflect the durability of demand and the firm's exposure to capital expenditure on AI.

Johnson & Johnson (NYSE: JNJ) is another US income stock that offers a rare combination of earnings quality and durable growth. Following the spin-off of its consumer-health division in 2023, it is a focused, innovation-driven pharmaceutical company and a leader in medical technology that should comfortably deliver mid-single-digit revenue growth. It has a diversified drug pipeline, which reduces risk, and its franchises in oncology, immunology and cardiovascular treatments are best-in-class, which will support cash flows in the long term. The medical-technology sector is growing strongly and the worst seems to be behind the company when it comes to legal issues. This is restoring investors' confidence and valuations. With a strong balance sheet, consistent free cash flow and a long record of dividend growth, Johnson & Johnson remains a core holding in volatile markets.

Morgan Stanley (NYSE: MS) is a global leader in the capital markets. Its earnings have become more resilient following a strategic pivot toward wealth and investment management, which generates stable, fee-based revenues. These annuity-like income streams provide downside protection while preserving upside exposure to appreciation in the markets and net asset inflows. The firm's strong capital position is enabling it to buy back shares and grow dividends. We believe Morgan Stanley's improved position will deliver impressive gains tied to long-term growth in the financial markets.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Charles Jillings, co-fund manager of Utilico Emerging Markets Trust, discusses the outlook for emerging markets and the long-term investment opportunities in infrastructure and utilities.

In this episode of MoneyWeek Talks, Andrew Van Sickle speaks to Charles about how emerging economies are dealing with Donald Trump's tariffs, the after-effects of the war in Iran, and why countries like Brazil and the Philippines are overlooked markets.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Another week brings another wild ride in the Middle East. Markets are still taking the swings far more calmly than almost anybody would have expected a few weeks ago. There's more volatility below the headlines when you look at which sectors are doing well or poorly, but the fact that global stocks are broadly unchanged since America and Israel first attacked Iran seems increasingly hard to understand.

One possibility is that investors remain optimistic that the crisis will pass and everything will go back to the way it was before. That is plausible, but becomes less likely the longer the disruption goes on. The second is that many people suspect that this is an inflexion point, geopolitically and economically, but feel that the long-term implications are still unclear. If so, it may be more sensible to do little and wait and see, rather than overreact wildly.

Brazil could prove to be a winner

So who, potentially, are the winners? The crisis will increase the focus on energy security, which should support commodity prices (short-term) and resource investment (medium-term). At a top-down level, maybe this will be good for Brazil. Yes, this is an economy with a long history of unfulfilled promises, but it is one that has done very well in previous resource booms.

Brazil's market is up strongly over the past year, but has not moved much in this crisis. On a forward price/earnings ratio of ten, it is not as cheap as it sounds (a cyclical economy should trade on low valuations), but it is not expensive. Brazil's economy is not immune to higher energy costs – diesel and fertiliser prices are rising – but very high use of biofuels should help insulate it to some extent. I am considering buying the Xtrackers MSCI Brazil ETF (LSE: XMBR).

What about the losers?

The crisis may accelerate the decline of the US dollar as the global reserve currency. The assumption is that this will be a gradual process given how embedded the dollar is in the global financial system – but we should remember that ruin often happens “gradually, then suddenly” in the words of one of Ernest Hemingway's characters.

Fewer foreign buyers for US Treasuries does not mean that America must go bankrupt – I do not think there is any likely way that America will default, other than stupid political theatrics around the nonsensical debt ceiling. However, the choices that it might one day have to make to avoid bankruptcy probably point either to much slower growth or higher inflation.

More broadly, it is hard to guess at this point what the implications are if the US dollar loses its unique status. A global financial system that no longer uses the dollar – and by extension many American companies – as the lynchpin of so many transactions could look very different. To take just one speculation, I hold Mastercard and Visa in my portfolio – I wonder how vulnerable they could be to potential efforts to decouple the world from America.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Is the US dollar still king?

Yes, the US dollar remains the world's de facto reserve currency and the unrivalled backbone of the global financial system: it accounts for 56% of global foreign-exchange reserves and is involved in 89% of all foreign-exchange market trades worldwide.

Although the US is responsible for less than a tenth of global trade, about 54% of it is still invoiced and settled in US dollars. About 60% of all international loans and deposits are denominated in dollars, as is 70% of international bond issuance. Even physical US banknotes are widely held abroad thanks to the dollar's broad acceptance in almost every country in the world and its perceived utility as a low-risk store of value. Indeed, the Federal Reserve estimates that over half of the more than $2 trillion of US banknotes in issue are currently held by foreigners.

Is that good for America?

Yes. The vast global demand for US dollars translates into an embedded premium for US assets and a discount for its debt – what France's former president Valery Giscard d'Estaing famously dubbed America's “exorbitant privilege”. It also puts the US in a uniquely strong position to damage the financial systems of other countries via the use of punitive sanctions.

Not everyone agrees that the privilege is all that exorbitant, however. Some US economists, including advisers to Donald Trump, argue that the costs of the US dollar's reserve status outweigh the benefits. It might make borrowing rates lower than otherwise, but (they argue) this discount is overstated, while reserve status also makes the US currency unduly strong, hurting US exporters.

From the rest of the world's perspective, though, controlling the world's most powerful and desired currency does seem like a very nice problem to have.

Why is the US dollar supreme?

The US dollar's strength rests on solid structural foundations: the size and openness of the US economy (accounting for about a quarter of global GDP), the liquidity of its financial markets, the rule of law and powerful network effects that are self-reinforcing. Put simply, says Paul Krugman on Substack, “the most powerful force behind the dollar's dominance is the fact that the dollar is already dominant. The very fact that everyone uses dollars as money makes it easier to use dollars than any other currency.”

The privilege this confers is often overstated, says Krugman, but it is real. Businesses and banks must often use the US banking system, meaning that US officials have the power to observe and, in some cases, block these transactions by, for example, imposing sanctions on adversaries and secondary sanctions on those who trade with them.

Is the US dollar's dominance declining?

Yes. Measured by central-bank reserve holdings, the US dollar's share has fallen from around 71% in 1999 to around 56% today. That's a meaningful shift, driven in large part by the creation of the euro at the turn of the century (it now has a 20% share). But that's scarcely a collapse. The dollar may well become less dominant as a unit of exchange, but it's unlikely to lose its crown as the global reserve currency, argue analysts at Charles Schwab, since there's no real alternative.

A reserve currency needs to be freely convertible and have deep and liquid bond markets to be considered safe for foreign central banks to hold – and there is no other national market that matches the US in terms of size and openness. The euro area's bond markets are far more fragmented. Japan's bond market is closely controlled by its central bank, which owns the bulk of its government debt. China has capital controls, excessive political risk and its currency isn't even freely convertible.

Is the US dollar safe?

It's more that “de-dollarisation” is likely to be gradual rather than imminent. Central banks are already diversifying holdings, buying gold (exceeding 1,000 tonnes annually, the highest in decades) and currencies that come without the geopolitical baggage of today's US (Canadian and Australian dollars, for example).

And there's been a proliferation of bilateral trade arrangements denominated in non-dollar currencies, particularly involving China – including agreements to settle energy trades in yuan, especially among countries (such as Iran) that are subject to, or wary of, US sanctions.

The “weaponisation” of the US dollar to impose sanctions following Russia's invasion of Ukraine gave new impetus to that trend. Yet to date, none of this amounts to a systemic shift. The yuan, despite China's economic heft, still accounts for only around 2% of global reserves. Yuan-denominated trade accounts for less than 4% of the global total; payment systems such as China's Cross-Border Interbank Payment System (CIPS) remain tiny relative to the dollar-based infrastructure centred on Swift.

How is Trump affecting the US dollar?

The turbulence of the second Trump presidency – from the tariff scares to the Iran war and oil shock – has ramped up talk of the US dollar's decline. Trump's unpredictability and apparent disdain for international order and traditional alliances sits uneasily with the dollar's putative role as a global public good.

The dollar slumped in the early months of the second Trump presidency, falling more than 8% in the first four months of 2025 as the world took fright at Trump's tariffs. Yet even from its peak in January 2025 (the start of Trump's current term), the dollar's fall still leaves the US currency near the high end of its 15-year range in trade-weighted terms.

Geopolitical shocks may well encourage hedging and experimentation with alternatives, and chip away at the dollar's aura of neutrality. Equally, economists will continue to worry about the sustainability of US deficits and its gigantic, growing debt pile ($39 trillion, or about 124% of GDP). But none of these factors, in themselves, create a viable successor. The dollar may decline, but there's no sign yet of its fall.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

What is stopping the UK from investing? It's a mixture of three main factors, according to Henry MacLeod, co-head of digital distribution at BlackRock.

In this episode of MoneyWeek Talks, Kalpana Fitzpatrick speaks to Henry about the state of investing in the UK, how we can debunk myths about risk, and whether AI can help you become a better investor.

Watch the full episode on our YouTube channel or on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

US debt is getting out of control. Amid the fog of war, it would have been easy to overlook the latest deficit number coming out of Washington. According to figures from the Treasury Department, the US national debt is now more than $39 trillion. It is only five months since it went past $38 trillion.

US debt has doubled from only $19 trillion when Donald Trump was sworn in for his first term as president. The overall debt-to-GDP ratio is now more than 124%, and by the end of 2026, interest payments will be more than $1 trillion a year. The deficit is rising at a relentless pace and the Treasury is issuing more and more debt to stay afloat.

The US debt pile is going to get a lot bigger over the next few years. Firstly, the Iran war is going to prove hugely expensive. According to the Pentagon, the first six days alone cost $11 billion and the total bill is already more than $40 billion and going up all the time. The hi-tech missiles and bombs the US deploys to such lethal effect are very expensive and the arsenals will have to be restocked soon. If the war goes on, the bill will keep rising – and that is before looking at aid to rebuild a shattered country if the regime falls.

Tariffs won't reduce US debt

Secondly, the revenue from tariffs looks more and more uncertain. Putting levies on everything America imports was always going to be a problem for the economy, but at least it brought in significant new revenue. It was, in effect, a tax, and given the size of the deficit, perhaps that was just what the US needed. The federal government collected $280 billion in tariff revenue in 2025, triple the figure for 2024, and the levies were only fully implemented in September. In March, however, the US Supreme Court ruled that the way they were imposed was illegal and exceeded the powers of the presidency. Even worse, the ruling may mean the revenue has to be repaid. The result? We can forget about that extra money reducing US debt, and the repayments, if that is what happens, will have to be paid with yet more borrowing.

Thirdly, the Department of Government Efficiency (Doge), the ruthless cost-cutting machine established by Elon Musk to take a chainsaw to government spending, has achieved very little. Musk talked grandly of cutting hundreds of billions from the state machine and hired a bunch of whizz-kids to make it happen. As it turned out, however, it turned out to be a lot harder than cutting costs at Twitter (now X) or one of his other companies. Doge did have some success: it cut the number of Federal employees by 9%, the largest fall since the demobilisation after the end of the Korean War in the 1950s. Even so, the unit has now been effectively disbanded as a single entity.

In effect, the Trump administration has given up on the attempt to slash waste and inefficiency. It proved to be too hard and little progress was made. Indeed, with the watchdog out of the way, all the staff who were laid off will probably be quietly restored to the payroll.

Finally, the mid-term elections due later this year will be terrible for the Republicans. Trump was already falling in the opinion polls, and the war in Iran has made his ratings worse. If there is a deadlock between Congress and the White House, we can forget about any controls on spending, on tax rises, or any serious effort to balance the books. There may be periodic shutdowns as the two sides fail to agree on a budget, but that won't reduce spending – it will just make the state even less effective. In reality, the political machine has lost the ability to put any meaningful restraints on spending.

True, the US economy remains strong, certainly compared with a stagnant Europe. But the maths can't be ignored forever. The last president to balance the books was Bill Clinton back in the 1990s. We don't know yet how a fiscal crisis will play out. There may be a surge in inflation, tolerated by the Federal Reserve, to whittle it away in real terms. The dollar may collapse as investors lose faith and switch to alternative currencies, perhaps including the newly launched digital yuan, or else gold or bitcoin. Or there may be a long shutdown as the federal government simply runs out of cash. We will find out over the next few years. For investors the important point is surely this: the dollar is not nearly as strong as it looks. Sooner or later there will be a crash – and the only smart move is to diversify before it happens.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Europe has lagged behind the US for years now, but what would it take for the continent to recover?

Daniel Avigad, manager of the TM Lansdowne European Special Situations fund, speaks to MoneyWeek's Andrew Van Sickle about opportunities in European equities, solving the continent's growth problem, and the consequences of populism.

You can watch the episode on our YouTube channel or subscribe to MoneyWeek Talks on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Matthew Partridge: What prompted your book?

Ram Charan: I have been working in China for more than 20 years with American, European and Chinese companies; in some cases I was on boards as a director. The wake-up call was when I noticed that one US firm, which had a dominant position in the Chinese market, saw its market share begin to decline. Next, its unit costs went up and then the Chinese Communist Party basically forced them to sell their business to the Chinese.

This caused me to realise what China is trying to do – produce 90% of the global output in a sector, using a combination of subsidies, currency manipulation, and artificially cheap land and capital, and then using this to gain a cost advantage over the rest of the world. This strategy has already been applied to achieve a stranglehold over ten sectors in the past five years. This in turn creates a trade surplus, which is propelling China's military. It's a very sophisticated economic model, which essentially runs China as a conglomerate like General Electric.

The public may love it because it produces an endless supply of cheap goods. But in the longer run it means that non-Chinese companies cannot compete with China. And if war breaks out, this could become an existential issue.

MP: How likely is war between China and the US?

Ram Charan: We are already at war. The US House of Representatives Select Committee on China said it explicitly in October 2025: this is a war of mutual destruction; economic, technological, existential. The trigger will not be a single event. Cumulative economic strangulation will reach a breaking point. Xi has built something more powerful than an invasion: asymmetric chokehold capability. China can now shut down whole industries in America and Europe at will by controlling rare earths, battery components, semiconductor materials and advanced chemicals.

When Beijing announced requirements for export licences in October 2025, Donald Trump responded with 100% tariffs. The countdown has started. The real trigger is industrial collapse. When CEOs in the US realise they can't build anything without Chinese inputs, including defence systems, the political pressure for confrontation becomes unstoppable. Taiwan is the flashpoint everyone watches. But the invisible trigger is America losing the capacity to respond militarily because China controls the supply chains for defence manufacturing itself. China is stockpiling wheat, oil, commodities, and building the world's largest navy – 370 ships versus America's 290. It is expanding its nuclear arsenal to 1,000 warheads by 2030, and aligning with Russia and North Korea in a trilateral axis that can strike the US mainland in 30 minutes.

Xi Jinping is lighting proxy fires in Ukraine and the Middle East through local actors to stretch US military resources. Xi would prefer America to concede without firing a shot, but he is prepared to fight if the US does not yield. Unless America rebuilds industrial capacity fast enough to break China's chokehold, conflict is certain within the decade.

Matthew Partridge: What should the US do to combat the threat?

Ram Charan: Both the US public and firms must understand they are not competing with individual Chinese companies, but with the nation. And they can't compete alone. There must be more collaboration among both countries and firms. I have suggested that Trump create a Department of Manufacturing and Technology, whose full-time job is to co-ordinate, integrate and plan in a similar way to how the Pentagon organises the defence sector to fend off an equally powerful opponent.

Matthew Partridge: Didn't industrial policy fail when the UK tried it in the 1960s and 1970s? Witness British Leyland.

Ram Charan: British Leyland failed because bureaucrats picked products and ran factories. What I am advocating is government staying strategic, not operational. The Chips Act is an example. Government subsidises semiconductor making. Intel, TSMC, Samsung decide what to build and how to run operations. Government creates conditions for private companies to compete against state-subsidised Chinese opponents.

However, in addition to subsidies and support you will need enforcement of basic trade rules. Stop the dumping. Counter the currency manipulation that gives China a 20%, unbeatable pricing advantage. You also need to change US CEOs' psychology. They still think “cheaper currency, cheaper labour” is how you win. Move up the value chain. Import technology and equipment, not consumption goods. Scale up medium-sized manufacturers with AI and automation.

This is about national security. China has destroyed key US industries, including furniture, apparel, solar, rare-earth metals and ship components. The next targets are AI, biopharma, aerospace, advanced semiconductors, and chemicals. If those fall, America cannot defend itself. This is not industrial policy as socialism. This is industrial policy as survival.

Matthew Partridge: How can you ask other developed countries to work together under US leadership given that Trump has imposed high tariffs on them? Isn't that going to make them less likely to cooperate?

Ram Charan: I think people misunderstand Trump's approach. While it's true he has imposed tariffs, and this has created a lot of confusion, he has done this to rebalance trade between the US and the rest of the world, eliminating the large US trade deficit with most countries. Once this is achieved, his aim is to reduce these tariffs by as much as possible. Already small countries like Oman face barriers of as little as 2%. The idea is to bring countries to the table to discuss the issue, not protectionism for protectionism's sake. US tariffs will decline as the other sides reduce their barriers to US goods.

Matthew Partridge: You say that you are confident about the US because of the openness of its system and because of its big research infrastructure. But Trump has undermined this advantage with immigration controls and cuts to research budgets. Many of Trump's policies seem counterproductive.

Ram Charan: I agree that they are counterproductive. And that's honestly something I don't understand. Maybe it's due to his own ideological belief, but attacking universities is not consistent with his aim to reindustrialise the US.

Matthew Partridge: Moving from countries to companies, is it fair to say that investment in China is a double-edged sword? Many firms are being forced to give up their intellectual property (IP) in exchange for cheap labour and access to Chinese consumers.

Ram Charan: Yes, it is a double-edged sword. Not only will they steal your IP, but once a Chinese company shows signs of winning significant market share, Beijing will back it to the hilt, and give it a huge amount of resources to expand further, so it starts to drive you out of the market. The next thing, you notice you are making losses and decide to leave, or you get a call “inviting” you to sell up – as Starbucks and many others have done. Beijing's attitude, particularly in industries it has explicitly targeted, is that “until we get our own capability, you are our guest”– but once China starts to build its own domestic capacity, the Westerners are either asked to leave or driven out.

Some of the smarter companies started to work this out about ten years ago, and reconsidered their global strategy, including discreetly building up their operations in other countries, such as India. As a result, they are now doing very well, with their Chinese rivals still lagging behind due to the fact that they have not accumulated the necessary expertise that they would have gained from having a Western firm in their midst.

Matthew Partridge: What does India needs to do to become an attractive alternative to China for Western companies?

Ram Charan: In order to attract Western firms fleeing China, India needs to put its house in order. This includes smashing bureaucracy to make it easier for them to operate. India also needs to have better training in manufacturing, because manufacturing requires quality and reliability, and Indian firms have to learn to match customer specifications.

That said, India has some companies that are number one in the world. This includes Bajaj and TVS, which have done a great job of producing quality scooters, as well as other two-wheelers. So India needs to build on this to climb the value chain into products like semiconductors.

Matthew Partridge: Are there any other companies that stand to benefit from Western companies relocating from China?

Ram Charan: Every developed country will benefit from re-shoring to reduce dependence on China. Among developing countries, the other big winners will be Vietnam, Mexico and Indonesia. However, for companies, the solution is not substitution but diversification to break coercive power.

After all, Mexico and Vietnam are also proxies for Chinese production – Mexico's trade with China exploded after Trump's tariffs as Chinese companies set up Mexican operations to bypass US trade barriers. You must audit the entire supply chain. Where do the components come from? Who owns the factory? Where does the capital flow? Companies waiting for a single “China alternative” will wait forever.

Ram Charan has spent 30 years advising Fortune 500 CEOs on China. His latest book, China's 90% Model: China Has America by the Throat – Here's How to Fight Back and Win, is published by IdeaPress Publishing.

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What's happened in the war on Iran?

The US-Israeli war on Iran, and Iran's military response – and the de facto closure of the critical Strait of Hormuz chokepoint – have shaken financial markets across the world. The war has sent oil and gas prices soaring and stocks falling (unless you're a big oil company; Shell hit record highs) and shaken up expectations of future growth (down), inflation (up) and interest rates (up). In the UK, consumers saw fuel prices jump and mortgage lenders scrambling to pull fixed-rate offers, while wholesale gas prices surged by two-thirds – soon to feed through into higher domestic bills. Even if the conflict remains relatively contained, it is already bad news for the global economy and will affect different regions in different ways, with net energy importers (such as the UK and Europe, and much of Asia) hit worse than net exporters (such as the US).

Why is the Strait of Hormuz so important?

The Persian Gulf and its immediately adjoining lands contain the world's greatest abundance of hydrocarbons and four of the world's five biggest oil fields (in Saudi Arabia, Kuwait and Iran) ship their product out through this narrow stretch of water. According to trade analysis firm Kpler, 31% of crude oil passed through Hormuz last year, along with 34% of global fertiliser supply and 32% of methanol, for example. The Strait's closure caused wild gyrations in the oil price this week. There were double-digit surges and falls according to events and to the latest capricious musing from the US president about his take on the war.

What about gas?

Arguably of even more pressing interest to the UK is the fact that 24% of natural-gas liquids and 19% of liquefied natural gas (LNG) also passes through the strait. Britain is at the start of a historic shift from reliance on domestic and Norwegian gas to far greater imports of Qatari gas (that is, from within the Persian Gulf, projected to make up a bigger chunk of the mix than North Sea gas by 2035). Prices of petrol and diesel have nudged up at the pumps, but wholesale gas prices are up around 60%, and will soon be feeding through into household bills and business costs. Nor is it just hydrocarbons and related products, says Neil Shearing on Capital Economics. Crises such as this have a habit of revealing chokepoints that were previously hidden. Qatar produces 40% of the world's helium, for example, crucial to the production of semiconductors.

Which economy will be worst affected?

The Middle East itself will be worst hit economically, as well as in lives lost and communities destroyed. During the 12-day war last summer, Israel's economy contracted by around 1% in the second quarter. If the present conflict is short-lived, a fall in output of a similar order of magnitude would seem plausible for both Israel and the Gulf economies. Iran itself might expect a fall in GDP of 10%. Otherwise, the region most exposed is the world's biggest growth engine, Asia. The Gulf supplies 40%-80% of the seaborne crude imports of China, India, Japan and South Korea, notes The Economist. It also accounts for nearly a third of China's LNG imports, more than half of India's and even more for some smaller Asian countries. Last year, 87% of the crude and 86% of the LNG passing through the Strait of Hormuz went to Asia, making any prolonged closure a grave threat to the region.

Will global GDP fall due to the war on Iran?

Yes, but unless the conflict spirals into a wider regional war in which oil supplies are severely disrupted for a prolonged period, then most forecasts cluster around a moderate global slowdown (of less than 1% of global GDP) rather than a catastrophic collapse. But the situation is extremely hard to predict. In the event of (say) a months-long closure of the Strait of Hormuz, major damage to Gulf oil infrastructure and oil prices rising towards $150 – unlikely, but not impossible – analysts suggest a knock to global GDP of up to 3%. While oil-sector experts are panicking, macroeconomists remain relatively sanguine, says Paul Krugman on Substack.

Partly that's because the US and other major economies have changed greatly since the 1970s. “They have become much less dependent on oil, and they are probably much less prone to experiencing inflationary spirals in the aftermath of an oil-price shock.”

How long might the war on Iran last?

“My bet: longer than you would wish,” says Rana Faroohar in the Financial Times. While Donald Trump has reason to want a quick end to the conflict, given the lack of clear objectives and the political damage from rising petrol prices, the Iranian regime has “arguably much to gain by prolonging the pain with drone strikes and attacks on neighbours in the Gulf. These would further disrupt energy markets, driving inflation higher across the world”. As analyst Luke Gromen put it in a recent newsletter, “Iran does not have to defeat the US military; it just has to defeat the US Treasury market”.

What should we expect next?

As the experience of the Ukraine war showed us, “inflation is not a single punch”: it hits first in fuel, then in food and other consumer sectors. Meanwhile, China, easily the largest purchaser of Iranian oil, may yet “leverage its own geo-economic advantage of having purchased ports all over the world” and of “controlling most of the ships on the planet”. Higher shipping costs spell more inflationary pain. And potential bond-market weakness is made worse by more government and corporate bonds being held by short-term, price-sensitive investors than in the past. All this makes it easy to imagine a rapidly unfolding US and global markets crisis. If the longer-term impact of Trump's foreign adventures is to “push up bond yields, inflation (which will only be partially mitigated by America's own domestic energy supply) and US deficits and ultimately trigger a big Treasury sell-off, the US and global economy will suffer mightily. I suspect, sadly, that this war and this market story will be with us for some time”.

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Donald Trump has picked Kevin Warsh as the new chairman of the Federal Reserve, the US central bank, after months of very public arguments. The markets liked the choice. Equities rose on the news and gold tumbled as investors decided they no longer needed to hedge against the collapse of the dollar. Warsh is an experienced banker and policy-maker, but he is also close to the Trump circle, and in the past has advocated bold reforms of the way monetary policy is set. Given that Trump could easily have appointed Elon Musk, or one of his children, or even Melania, Warsh is seen as a relatively safe pair of hands.

Still, the challenges Warsh faces are daunting. First, he will have to re-establish the independence of the central bank. Trump has very clearly been trying to bring the Fed under political control, pushing it to cut interest rates even though it is far from certain that inflation is not going to start rising again. The incumbent, Jerome Powell, is facing legal action for overspending on the Fed’s new headquarters. The markets are not going to trust a Trump stooge and especially one who looks willing to start printing money to finance the president’s lavish spending and tax cuts. At some point, Kevin Warsh will have to make it clear that he is in charge, not the president. If he doesn’t, and if he seems to be conceding to Trump’s demand to juice the economy, especially ahead of the mid-term elections due later this year, the sell-off of the dollar, and Treasury bills, will start up all over again, and perhaps more savagely.

Next, Warsh needs to persuade both the White House and Congress that the deficit genuinely matters. The US economy is in robust health, but the budget deficit is still running at more than 5% of GDP and there are no plans to bring it under control. The US state has become addicted to borrowing to finance its spending. The last president to actually balance the books was Bill Clinton at the start of the century. The US has managed to get away with it so far, racking up bigger and bigger debts with every year that passes. But it has benefited from its reserve currency status, and it has been able to mop up huge amounts of Chinese savings. None of that will necessarily last forever. Warsh needs to find a way of getting the Senate, Congress and White House to control spending and, if necessary, raise taxes. The US can’t run deficits forever without risking ruinous inflation.

Thirdly, the new Fed chair needs to reinvent the dollar for a post-globalisation world. Trump has made it clear he does not want the US to finance the global trading system, that he is determined to bring free trade under control, and he wants to put America first. That is why he has ripped up the free-trade consensus and imposed the steepest tariffs since the 1930s. Whether the dollar can remain the global reserve currency in those circumstances is far from clear. Indeed, there is already evidence that central banks around the world are diversifying into gold and even bitcoin. The European Central Bank is too weak to influence anything, but China is carving out a global role for the yuan, and that is only going to grow in significance. What is the role of the Fed in all of that? Warsh will need answers, or else be left floundering as the world changes around him.

Kevin Warsh will need to calm the AI bubble

Finally, Kevin Warsh needs to calm an AI and tech bubble that has run out of control. AI is clearly a major new technology, and will create huge business opportunities, but it is also clear that investors have driven valuations far too high, just as they did at the height of the first internet boom a quarter of a century ago. Likewise, a handful of leading tech stocks have dominated the global markets. Sure, it will be great for the US economy that so much money is invested in the technology, with more than $100 billion poured into data centres and start-ups over the last year. It will pay off eventually in terms of new products and higher productivity, and it is a lot more impressive than anything that is happening in Europe. Even so, a crash will derail that, and once it starts may easily run out of control. The trick for Warsh will be to curb what one of his predecessors, Alan Greenspan, described as “irrational exuberance” without the entire market collapsing. It will not be easy. But he will have to try all the same. If the bubble carries on for another year, it will be too late.

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Is Canada worried about Donald Trump?

Yes, Canada is very worried. The advent of Donald Trump’s second term as US president a year ago – accompanied by presidential threats about seeking to make Canada the 51st state – dramatically transformed Canadian politics. The poll ratings of the Conservatives, led by Trump-aligned Pierre Poilievre, slumped. And the Liberals, under their new leader Mark Carney – who campaigned on a platform of hard-headed patriotism and economic nous – surged to an unlikely victory in last April’s election. Just hours after winning his own mandate as PM, Carney delivered an extraordinary warning about how his nation’s powerful neighbour and long-time closest ally was becoming its greatest threat. “America wants our land, our resources, our water, our country,” he told supporters. “President Trump is trying to break us so that America can own us. That will never ever happen.”

How has US-Canada's relationship been?

Up and down, with signs of some grudging respect for Carney in the White House, and some accommodations by the Canadian PM that belie his more robust rhetoric. Tariffs have been imposed, and sometimes walked back. Economically, the worst has not happened. But there has been permanent strategic damage done, and no Nato member has been as assertive as Carney in standing up to Trump’s talk of hemispheric dominance and threats to his neighbours’ sovereignty. In the case of Canada, as in Greenland, that threat is real, not imagined. Last month, US Treasury secretary Scott Bessent encouraged the secessionist movement in the western resource-rich province of Alberta, saying the region should “come on down” and join the US – astonishing talk from a supposed ally. Last month in Davos, Carney won a rare standing ovation from politicians and business leaders after warning of a “rupture” in the world order, and pledged that Canada would take on “the world as it is, not wait around for a world as we wish it to be”.

How intertwined are US and Canada?

Exports account for a third of Canada’s GDP and more than 75% of them go south to the US. By contrast, exports account for about a tenth of America’s GDP, and only around 16% of them go north to Canada. So the imbalance and dependent relationship is stark. While Canada’s exports to the US account for about 25% of its economic output, the US’s exports to Canada make up a tiny sliver (roughly 1.6%) of its national GDP. Moreover, many of the two countries’ biggest industrial sectors, including automotive and energy, are “almost irreversibly interwoven”, says Emily Stewart in Business Insider. For that reason, Carney is treading an exceptionally fine and difficult line between standing up for Canada’s interests and making things worse by angering Trump. In some ways, a more economically assertive Canada has been necessary for a while. From Bush’s “You’re with us or against us” mentality post-9/11 to Obama’s “Buy America” push to Biden’s industrial policy, the US “has been acting like a less friendly friend for a while”, says Stewart. Under Trump, there’s been a radical shift – most recently with his threat of a 100% tariff on Canadian goods if Ottawa follows through on a trade deal with China in the face of US opposition.

How effective is Trump's tariff threat on Canada?

Currently, about 85% of Canada’s trade with the US is exempt from tariffs under the 2020 US-Canada-Mexico free-trade agreement, known as USMCA. Even so, Trump’s mercantilist trade policies have had a sharp impact on vital sectors of Canada’s economy, in particular the automotive industry, steel and aluminium, and softwood forestry – all of which have suffered significant job cuts as the result of US tariffs. The trade agreement is up for renegotiation later this year, adding to the peril for Canada. Understandably, the Carney government is now working at speed to cut its dependency on the US and boost trading ties with other nations. About three-quarters of Canada’s exports go to the US; the aim is to reduce this to half.

What is Canada doing to that end?

Carney has launched a “nation-building” infrastructure agenda, including high-speed rail and port expansions that will be used to transport abundant natural resources to new markets. In addition, his government has announced plans for more (small modular) nuclear reactors and wind power, a doubling of liquefied natural gas production and faster extraction of critical minerals. To that end, Ottawa is embracing a “more active industrial policy” alongside a streamlined bureaucracy to “try and direct the economy and reduce red tape”, says Ilya Gridneff in the Financial Times. Besides, Trump does not hold all the cards. Most of the oil imported by the US comes from Canada. Canada’s biggest export is oil and gas piped to US refineries through networks that would cost billions to replace. The USMCA is too successful to fail. And the second biggest export sector – cars, vehicle parts and metals – have been built into a cross-border supply chain since the 1960s.

Are markets worried?

They’re pretty sanguine. Fiscally, Canada is in reasonable shape. Royal Bank of Canada expects an overall budget deficit for this year of 3.3% of GDP, not excessive compared with the US’s near-6%. The Canadian dollar has strengthened against the US currency during Trump’s second term and the benchmark TSX Composite index has been hitting record highs – it’s up 30% over the past 12 months, almost twice as much as the S&P 500. The main reason, says Lex in the FT, is that about half of Canada’s stockmarket is accounted for by natural resources – where prices reflect global trends and which the US needs in large quantities – and finance, which is outside the tariff net. In the US, those sectors account for about 15% of the equity market. “Canada is my biggest overweight among developed markets,” says Marko Papic, a chief strategist at BCA Research. “Carney knows exactly what he’s doing.”

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What's going on between Greenland and the US?

No one is sure what is going on between Greenland and the US and many are too shocked to try and work it out. But the events of the past week look and sound awfully like the shattering of the 80-year-old Atlantic alliance. For having the temerity to oppose US annexation of Greenland – an autonomous Danish territory whose 60,000 or so residents are Danish and EU citizens – the US president announced 10% tariffs on eight European nations, including Denmark and the UK. By not accepting the need for US sovereignty over the world’s largest island, first settled by Norse explorers more than a millennium ago, America’s Nato allies had created “a very dangerous situation for the Safety, Security, and Survival of our Planet”, Trump wrote. He said the 10% import taxes would rise to 25% in June and continue “until such time as a Deal is reached for the Complete and Total purchase of Greenland”.

Is Greenland for sale?

No, Greenland is not for sale, but this is at least the fourth time Washington has tried to buy it, which is geographically part of North America. In 1868, US secretary of state William Seward pursued the acquisition of both Greenland and Iceland (which didn’t gain full independence from Denmark until 1944) for a reported $5.5million (about $130million today). It followed the successful purchase of Alaska from Russia the previous year for $7.2million. The talks stalled, and there were similar failed negotiations in 1910. It wasn’t until 1917 that the US formally recognised Denmark’s sovereignty over Greenland, in exchange for the US purchase of the Danish West Indies (now the US Virgin Islands).

Why does Trump want Greenland?

Location, natural resources and prestige – but it’s not clear in what order. After World War II, when the US occupied Greenland with Danish consent, president Harry Truman offered $100million (about $1.7billion today) to buy the island. That, too, was turned down, but a 1951 US-Denmark defence pact once again recognised Danish sovereignty, while giving free rein to the US to build military bases there. For decades, under the Nato umbrella during the Cold War, the US made the most of that right, principally at the Thule air base, on the northeast coast 750 miles north of the Arctic Circle. At its peak, the base (now renamed the Pituffik Space Base) was home to 6,000 US military personnel, with another 4,000 across the island. Today, there are fewer than 200.

Is Greenland not exactly a strategic priority?

Quite. But the world’s heating climate has changed that sanguine calculus. Global warming is opening up Arctic sea routes, making the exploitation of Greenland’s mineral resources more plausible and conceivably increasing the threat to the US from Russia or China via the polar region. But when it comes to resources – Greenland has 39 of the 50 minerals classed by the US as critical to national security – the economic case doesn’t add up. Greenland is an island the size of Saudi Arabia with just 100 miles of paved roads in total, and most of the territory is covered by an ice sheet up to a mile deep. “The harsh environment, enormous financial investments, and massive infrastructure and workforce buildout required to create an economic engine could cost at least $1trillion over two decades [and makes] little to no economic sense,” says Jordan Blum in Fortune. There’s oil, but the last, unsuccessful drilling bid was abandoned in 2011. Neither of the active mines extract the desired rare earth metals essential to computer, vehicle and military equipment. Moreover, Greenland is already open for exploitation, and sovereignty would add nothing.

What about the security argument?

Greenland is on the fastest routes between the US and Russia. Existing defence treaties with Denmark give Washington all of the necessary military access for “Golden Dome” bases and naval patrols. But Trump is on a drive for hemispheric dominance and – perhaps – personal prestige. His administration increasingly sees the world in terms of 19th-century Great Power politics, with the Monroe Doctrine of US hemispheric hegemony – and its new “Trump Corollary” – specifically at its centre. In 1848, the British foreign secretary Lord Palmerston observed that England has no “eternal allies or perpetual enemies” – only eternal and perpetual interests, and “those interests it is our duty to follow”. For the 19th-century hegemon, Great Britain, read Trump’s America today. Trump believes the Atlantic alliance is ineffectual, so it doesn’t matter to him that the US could achieve all of its national security and economic objectives without annexing Greenland. Trump’s “eternal interest” is in safeguarding the security of the US in perpetuity, and he appears to have determined that acquiring sovereignty over Greenland is vital to that end.

What can Europe do?

Protect its own interests. European governments and investors own around $8trillion of US bonds and equities – almost twice as much as the rest of the world combined. But pulling that investment back is likely to be a slow process, with investors wary of overreacting. If Trump’s tariffs had gone ahead on 1 February, then Brussels would almost certainly not ratify last year’s EU-US trade deal, and retaliatory tariffs would be on the table. The nuclear option for Europe would be the EU’s Anti-Coercion Instrument, a law that allows the EU to respond punitively to economic blackmail from non-EU countries interfering in the “legitimate, sovereign choices” of the EU or its member states. Measures include tariffs, import and export restrictions, curbs on trade in services as well as reduced access to banking and capital markets – and blocking access to most of the single market while ignoring existing international treaties. It’s a nuclear option as it would wreak major economic damage on Europe itself, and is designed more as a deterrent – bringing offenders to the negotiating table – than as an offensive one. Let’s hope it isn’t needed.

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The histories of the UK and Argentina are closely linked, with the relationship often marked by irony. The staff bar at the British embassy in Buenos Aires (BA) is called The Hand of God, and Argentina’s president Javier Milei cites Margaret Thatcher as his hero. He claims that the British leader, responsible for the controversial sinking of the ARA General Belgrano during the 1982 Falklands War, has been inspirational to the economic revolution he initiated in 2023.

Indeed, on the issue of the Falklands, Milei has said that he sees a future where the Malvinenses vote with their feet to join Argentina’s future success. However, over the past year, that future seemed increasingly in peril as the “Milei Revolution” faltered, just as the UK most needed it as an inspirational route out of its stagnant economy trapped by government overreach. Despite a series of setbacks, Milei unexpectedly recovered to win the critical midterm elections. The 26 October midterms were the first national referendum on Milei’s painful but necessary economic shock therapy. After two years of deep spending cuts and fiscal adjustment, the vote was a critical test of the public’s willingness to endure hardship for the promise of political stability and economic growth.

It would either validate Milei’s radical mandate or signal the beginning of the end for his ambitious project. The unexpected outcome represented a stark repudiation of the consensus view. Following allegations of corruption targeting the president’s sister and general secretary, Karina, and disastrous provincial election results just six weeks earlier, it began to appear as if Argentina might once again snatch defeat from the jaws of victory. On 7 September, Milei’s La Libertad Avanza (LLA) party was trounced in the significant BA Province, leading to widespread speculation that Milei’s support was collapsing.

How Javier Milei overturned the odds

However, just six weeks later on the national stage, the LLA roared back with a victory that shattered most expectations. The man with the chainsaw and a unique economic vision for his country had again overturned the odds. In the more significant national poll, the LLA secured 41% of the vote. Theories for the dramatic turnaround ranged from a galvanised anti-Peronist voter base following the provincial poll to an unproven but widely circulated claim in pro-Milei circles that a more secure national voting system had eliminated a million fraudulent provincial votes. Others accused the US of buying Milei’s victory with a strategically timed financial intervention in the days before the ballot.

Regardless, financial markets, which had braced for the worst and sold off after the September results, exploded. There followed a melt-up in the Argentine peso as investors priced in the new reality: Milei’s reform agenda had received widespread endorsement and a runway extension that could lead to an all-important second term. The currency leapt by more than 8% versus the dollar. Long-dated sovereign dollar bonds rose 20%; bank stocks rocketed, with the share price of Grupo Financiero Galicia, the country’s largest listed bank, gaining 130% from its mid-September low.

Although the LLA remained a minority force in both houses, the election shifted the balance of power. By more than doubling its representation, Milei’s party critically strengthened his political authority. Holding more than one-third of Congressional seats, the LLA can now prevent the opposition from mustering the two-thirds supermajority needed to override a presidential veto. As investors celebrated Milei’s strengthened political position, the real test is how the new arithmetic in Congress can translate market euphoria into tangible success. Despite reaching this key political milestone, the path to lasting economic recovery remains far from clear. Politics is always uncertain; Argentine politics is, by a factor, more so.

Milei's bold experiment

Argentinians have lived through a high-stakes experiment in fiscal discipline and deregulation. For investors looking on, there has been a remarkable macroeconomic stabilisation with plummeting inflation amid early signs of robust economic growth. However, for people on the ground, it has come at a profound cost, which they cannot endure indefinitely. The clock is ticking, but Milei has added valuable extra time. His success matters beyond Argentina.

Milei’s overarching achievement so far has been to strangle the hyperinflation that threatened to consume the nation in 2023. He inherited an economy on the brink of collapse, with an annualised inflation rate of 15,000%, a fiscal deficit equivalent to 15% of GDP, and no borrowing capacity. His response was immediate and uncompromising.

In the words of his British political hero, there was no alternative. Milei slashed public spending, cutting the number of government ministries by more than half and laying off tens of thousands of public workers. By March 2024, Argentina recorded its first fiscal surplus in a generation. The effect on prices was dramatic. Reported monthly inflation plummeted from 25% in December 2023 to just 2.4% by the time I visited BA in November 2024.

However, the cost of living in BA was not as cheap as you might expect; the peso had strengthened. Yet an early decree repealing stringent rent control laws had a swift impact on the housing market. Real rental prices fell by 30%, while supply tripled. My Airbnb, a newly built flat in a nice part of town, worked out to about £60 a night.

But ripping off policy plasters always has negative consequences, and the removal of long-standing subsidies for public transport and energy revealed the extent of Argentines’ dependency. A friend who has lived in BA for many years reported that his monthly electricity bill increased from $8 to $32 over a few months. Not too much of a problem for a British expat, but Argentina’s poverty rate, an absolute measure of survival, jumped to 57% – although it declined to 46% later in 2024 and to 32% in the first half of 2025.

Amid the fiscal contraction and economic restructuring, unemployment jumped to a four-year high of 8% in early 2025. But this measure only tells part of the picture. Significantly, informal measures of underemployment increased in Argentina’s vast grey economy, where over 40% of people work undocumented. Such indicators threatened to derail the entire project, creating an opportunity for Milei’s opponents in September’s provincial elections. Fighting inflation involved defending an overvalued peso, and this policy was costing Argentina an increasing share of its scarce currency reserves. Argentina’s financial position started to fray, and doubts about the Milei plan multiplied.

A lifeline from Donald Trump

It was at this point that the White House provided a critical financial backstop in the form of a US Treasury-backed $20 billion swap line, followed by a similarly sized, bank-financed package – stabilising market sentiment and granting Argentina access to scarce dollars.

The prime motive for any refinancing is open to interpretation. One person’s bailout is another man’s prudent liquidity boost to tide things over to secure growth. Donald Trump’s peso intervention was no exception: US Treasury secretary Scott Bessent indicated that underwriting Argentina’s access to dollar reserves was a rational act that protected America’s share of the International Monetary Fund’s outstanding $45 billion loan to Argentina. He went on TV to claim the US had made a profit on the trade. As a former global hedge fund manager, he found it difficult to hide his satisfied grin.

However, whether financially savvy or not, with the US Department of State currently re-enacting the 1823 Monroe Doctrine in Venezuela, support for Argentina is as strategically sensible as it is economically rational. With the world fracturing into key spheres of influence, Argentina’s alternative was to increase its exposure to China’s Belt and Road initiative for the long-term prize: access to Argentina’s vast, untapped natural resources, including shale oil, rare earth elements and its significant agricultural output.

Despite a backlash from the US farming lobby, which claimed that Argentina’s farmers were receiving better treatment from Trump than American soybean growers and cattle ranchers, the US administration’s support for Milei was ultimately strategically vital. Expectations are that Milei will undertake a reset of his policy agenda and delivery. Critically, Milei plans to push labour, pension and tax reforms. The government argues that more flexible labour laws would make it easier for companies to put informal workers on the books, granting them access to benefits and increasing pension payments. But such measures will undoubtedly provoke further union opposition and strike action, which in Argentina often extends to political violence. The struggle for the Milei Revolution is not over.

Furthermore, alongside his full agenda of domestic reforms, Milei must also address his key external problem: the peso. In particular, he must morph his managed peso bands into a more fully fledged floating exchange rate. If anything signifies the success of the Milei Revolution, it is his ability to land this hard-to-control plane in a world of economic turbulence.

Once in the category of currencies reserved for the Zimbabwean dollar and the Venezuelan bolívar, the Argentine peso would, by standing unaided in the global currency market, signal Argentina’s final recovery like nothing else. This landmark achievement is a prerequisite for Milei to return Argentina to the ranks of the world’s top economies.

And why does this matter to the UK? The UK’s out-of-control fiscal position and government overreach are taking us towards the same ultimate endgame that Argentina has experienced over decades. The particulars of our economies and politics differ; however, the UK is currently on a path that, sooner or later, makes a Milei-style reset unavoidable.

How far down this ruinous road must the UK travel before voters can handle such hard truths? And who will deliver this message to an electorate that chooses not to listen? It has taken 80 years of Peronist dysfunction for Argentina to reach its point of no alternative. The lesson from the Argentine experience is that the longer it’s left, the more painful the required adjustments will be. Even now, for Argentinians, the path remains uncertain – and is still painful. But with Milei, they have a man honest enough to tell them the truth and survive. The UK might not be so fortunate.

Jeremy McKeown is market strategist at Dowgate Wealth and writes the blog HyperNormalTimes on Substack.

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Zohran Mamdani: A socialist takes New York

“We cannot have a socialist” running “the greatest capitalist city in the world”, observed one Wall Street financier just before November’s mayoral election. Get used to it, said The New Yorker. On New Year’s Day, Zohran Mamdani will become the first avowedly socialist mayor of New York, and its first Muslim leader to boot, following a meteoric rise. A year ago, most had never heard of the youthful Assembly member from Queens. But Mamdani’s rising star – on a platform of soaking the rich to fund rent freezes, free bus travel and universal child care – has proved unstoppable.

Donald Trump, who once called Mamdani a “100% Communist lunatic” and threatened to deport him, changed his tune when he met him, staging a surreally chummy press conference with his charismatic fellow populist. “As well as coming from nowhere” to win New York, Mamdani has “succeeded in setting” America’s domestic economic agenda in 2025, making the issue of “affordability” the watchword of his slick TikTok campaign. Born in Uganda, Mamdani, 34, arrived in New York aged seven. His unremarkable CV since might suggest he’ll struggle to run a city with “the economy of a medium-sized nation”, says The Economist. And his hands are tied: the state legislature seems unlikely to pass his full $9 billion package of tax hikes. But the city’s fate ultimately depends on whether Mamdani shows “a pragmatic streak”, says The Wall Street Journal – or views “his mission” as “creating a socialist lab experiment”.

Javier Milei: El Loco stands at a crossroads

Argentina’s chainsaw-waving “libertarian firebrand” Javier Milei narrowly escaped financial meltdown this year – helped by a $20 billion lifeline from the Trump administration to avert a currency crisis and “Make Argentina Great Again” – before pulling off a surprising landslide in the country’s midterm elections, says Bloomberg.

Nicknamed “El Loco” (The Madman) as a teenage goalkeeper, Milei has often seemed determined “to perpetuate this reputation with his egotistical boasts and brutal attacks on critics”, notes The Washington Post – not to mention “his crazy hair, cloned dogs and claims of expertise at tantric sex”. Yet since coming to power in 2023, the results of his far-reaching free-market reforms have been impressive, says The Economist. Inflation is down from 211% to around 30%, the poverty rate has fallen and “the budget has been wrestled under control”. Milei is now moving towards a floating peso and removing most capital controls. The process has been painful, but voters have kept faith with his vow “to jolt” Argentina “out of more than a century of statism and stagnation”. Markets, in turn, have celebrated, judging the prospect of Milei’s re-election next year now more likely. “Rev up the chainsaw!”

Much could yet go wrong. Milei is now at a crossroads, Carlos Malamud, a Latin America specialist at Madrid’s Real Instituto Elcano, told the Financial Times. “He has everything he needs, if he gets it right… to lead a deep transformation of Argentina.” But if “arrogance gets the better of him again”, all bets are off.

Sanae Takaichi: Japan’s Iron Lady

The new Japanese premier, who made history in October when she became the country’s first female PM, has proved a gift for headline writers. Known for her love of hard rock and motorbikes – and citing Margaret Thatcher as an inspiration – Sanae Takaichi has gone “from Iron Maiden to the Iron Lady”, says Sky News. But she has taken a battering at the hands of bond markets. Since taking power, and shocking investors with a “low quality” fiscal expansion of $135 billion – “including such gems as rice vouchers and subsidies for fossil fuels” – yields on Japanese debt have “spiked wildly across the maturity curve”, says The Telegraph. The risk that this could escalate into a major crisis in Japan’s historically sedate $12 trillion bond market “has sent tremors” through the markets.

When it comes to dealing with Donald Trump, she appears to have learned from her mentor, the late Shinzo Abe, that “flattery, deference” and golf-related “gold-plated gifts” were the way to go. “Takaichi’s smorgasbord of giveaways” may make a “mockery of Thatcherism”, but she does share some traits with her heroine. “Like the late Iron Lady, she has little patience for other career women,” says The Telegraph. She belongs to Nippon Kaigi, “a nationalist nostalgia movement that fights feminism and harks back to the Samurai ideal of women as the anchor of home and family”. Still, unless she is careful with bond-market vigilantes, Takaichi runs the risk of comparison with another UK Conservative prime minister – Liz Truss.

Liang Wenfeng: The hedgie who shook the world

The entrepreneur behind DeepSeek began 2025 with a shot that rang around the world, says Fortune. Billions of dollars were wiped off the value of Silicon Valley’s AI titans in January when the unknown Chinese start-up revealed its prowess at developing cutting-edge AI at a fraction of the cost – raising doubts, that have lingered all year, about the gargantuan sums being spent in the West. “Whether by chance or design”, the launch of DeepSeek’s R1 coincided with Donald Trump’s inauguration, says Time, creating “a powerful narrative” that China had “matched America’s best with just a fraction of the computing power”. It was hardly the best start in Washington to a year of tight trade negotiations.

Liang Wenfeng, 40, who hails from a village in southern China, isn’t a computer whizz so much as a financier. After graduating from Zhejiang University, he co-founded the quantitative hedge fund High-Flyer in 2016 – originally using AI as a trading strategy to predict market trends and help make investment decisions. In 2021, says the Financial Times, Liang began buying thousands of Nvidia chips as “an AI side project”. At the time, local business partners viewed this as “a quirky hobby”. But when he started DeepSeek in 2023 – and began challenging local rivals ByteDance and Alibaba – they sat up. DeepSeek has spent its short corporate life having to work around successive US bans on the export of vital chips to China. The upshot, says the South China Morning Post, is that Liang has become one of the most forceful drivers of China’s push for technological self-sufficiency.

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In September, reports began circulating in Kyiv that a high-profile and controversial American was sniffing around for business. “Military hawks and defence privateers” described how Erik Prince – founder of the now defunct mercenary company Blackwater – had been “aggressively pitching his services” and was on a “hunt to acquire drone-makers with a footprint in Ukraine”, noted The Guardian. The rumours tallied with reports that the Trump administration may be lining up US private military contractors to operate in post-war Ukraine.

Prince has also been preparing the ground in Venezuela, where Trump has just imposed a no-fly zone and issued an ultimatum for the president, Nicolas Maduro, to relinquish power. He was in the country last year, spearheading a local fundraising campaign to oust the leftist strongman. By his standards, that action was quite mild, observes The Times of India. Prince’s more “controversial” recent operations include “advising on a drone assassination programme” in Haiti.

Suddenly it seems “America’s most notorious mercenary is everywhere”, says The Economist – at the heart of a resurgence of private military companies, his services “more in demand than ever”. Prince’s “worldview” has certainly never chimed better with those holding power in America. Unlike most mercenaries, he does not shy away from publicity. “Cocksure and combative,” he brims with “machismo” and is lauded by his friend, US secretary of war Pete Hegseth, for his “warrior ethos”.

A former US Navy Seal, Prince, 56, was born into a family of Michigan industrialists, renowned for their god-fearing ways and political activism – and had “an intensely conservative upbringing”. After leaving school, Prince joined the US Naval Academy, reportedly quitting after three semesters because “he found the place too liberal”, says The Economist.

He interned in George H.W. Bush’s White House before joining the Seals, serving in the Balkans, Haiti and the Middle East. The death of his father in 1995 brought him home. Prince sold the family business for $1.35 billion, using some of the proceeds to set up Blackwater. Quickly expanding its services, the company became internationally infamous for its activities during the Iraq and Afghanistan wars and was “blacklisted” in 2007 following a “massacre” in Baghdad. Four security guards were later convicted of murdering 14 Iraqi contractors. In 2020, Trump pardoned them.

In 2009, Prince sold the remnants of Blackwater and moved to the UAE, establishing a string of new companies. The most prominent, says the Financial Times, was Frontier Services Group – a Hong Kong-listed firm, backed by China’s state-owned investment house Citic, which ran logistics for mining and energy companies in Africa. This pivot, from “Bush-era military adventures” to Chinese “Silk Road” fixer, raised eyebrows in Washington. Indeed, Prince’s attempts to re-establish himself during Trump’s first term ultimately failed, says CNN, even though his sister, Betsy DeVos was serving in the administration. “Banned from inside the Pentagon and CIA” by officials concerned his outfit “brought unwanted scrutiny and pushed the boundaries of legality”, he went on to be investigated by the UN for alleged arms trafficking to Libya.

What will Erik Prince do next?

With a more untrammelled Trump back in office and in need of on-the-ground operators, “the former pariah… has newly reestablished himself”, says CNN, doing what he does best – spotting opportunity in chaos. Prince’s return is a sign of the times, says The Economist: a world in which “private firms with private firepower” – specialising in “bringing order” – are deemed the only alternative to “total anarchy” in some countries.

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Canada’s stocks have enjoyed a revival this year. The S&P/TSX Composite index has gained 25%, eclipsing America’s S&P 500, up just 16%. Canada has been one of 2025’s best-performing developed markets, an early sign that the post-globalisation era will reward a very different set of winners.

With economies reshoring and supply chains shortening, the natural lottery of geography and geology has never mattered more. Few nations have hit the jackpot quite like Canada, which ranks among the world’s top-five energy producers and sits atop $1.7 trillion of natural-resource wealth from oil, gas and uranium to potash, gold and timber.

Crucially, Canada pairs this abundance with political stability and alignment with the West, which is a rare combination in a world of rising authoritarianism. As Washington turns inward, Canada’s calmer politics, under the steady hand of prime minister Mark Carney, could become a safe haven for investors seeking exposure to the decade’s defining themes without populist noise.

Canadian stocks for your portfolio

Canada’s most strategic energy resource may be uranium. As the world’s second-largest producer, it stands to gain as nuclear power returns to the global electricity mix. Governments are extending reactors’ lifespans, new builds are back on the agenda, and even the Magnificent Seven are investing in nuclear projects to power AI data centres’ colossal energy needs – demand that could require 50 new reactors by 2030.

After years of supply cuts following the disaster at Fukushima and the West’s retreat from dependence on Russian energy, markets are turning to reliable producers such as Canada. At the heart of this revival sits Cameco (Toronto: CCO), one of the world’s largest and most cost-efficient uranium miners. In partnership with Brookfield and Westinghouse Electric, it plays a central role in supplying Western markets. The shares look promising as miners scramble to restore supply after a decade-long glut. The infrastructure sector has benefited from nearshoring, electrification and decarbonisation. The $1.2 trillion US Bipartisan Infrastructure Investment and Jobs Act alone is funding more than 66,000 projects, while Carney’s industrial strategy aims to channel billions into Canadian clean energy, advanced manufacturing and critical minerals.

Stantec (Toronto: STN), a global leader in sustainable design and engineering, is a clear beneficiary. Its diversified footprint across energy, water and transport positions it perfectly for North America’s rebuilding cycle. A focus on efficiency has delivered industry-leading profit margins, while exposure to US and Canadian infrastructure spending bodes well for growth.

Canada’s answer to Nvidia

Technology is a further major driver of the portfolio. We first bought Nvidia in 2016 at an average price of around $1.35 and have benefited from its meteoric rise ever since. But we have found the next wave of opportunities closer to home.

Celestica makes high-speed components to expand global data centres. With Nvidia, OpenAI and Oracle investing hundreds of billions of pounds in new AI computing power, Celestica sits in the middle of the supply chain. With Celestica’s sales from AI-related hardware surging 80% last quarter, we can access all the disruption of Silicon Valley at a Canadian discount to heady US tech valuations.

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Technological improvements have unrecognisably changed much of the global economy in the last 30 years. But one area that remained steadfastly stuck in the past is one of the most fundamental parts of any economy – money. In recent years, however, a financial revolution began. Cryptocurrencies have been with us now for 16 years, but they bring with them a whole host of complexities that only the faithful are willing to overlook. In most cryptocurrencies acolytes lies the spirit of the rebel – somebody who wishes to sit outside the system with their wealth independent of oversight and away from traditional assets. Inevitably, this has roused suspicion that the main benefit of cryptocurrencies is as a cover for nefarious activities.

A different type of cryptocurrency has recently come to light – stablecoins. Where Bitcoin and similar digital currencies aim at tearing down the financial order, stablecoins’ purpose is to improve it. These digital assets, backed by real-world currency, are beginning to act as an important bridge between the traditional financial system and the burgeoning world of decentralised finance. At the forefront of this movement is Circle (NYSE: CRCL), a US-listed financial technology (fintech) business that is positioning itself to be a central player in this new global landscape.

What are cryptocurrencies?

Cryptocurrencies are essentially strings of data that represent value. The key characteristic is that they are fungible, meaning that any one unit is interchangeable with any other, just as a pound coin is equal in value and function to any other pound coin. The magic that makes these digital assets secure lies in the blockchain, a development that became possible with the internet.

A blockchain is a decentralised digital ledger, a record of all transactions, that is maintained across a vast network of computers rather than being held by a single central authority, such as a bank. To understand its power, consider the traditional system of double-entry book-keeping. When you send money to someone, both you and the recipient keep a record of the transaction. A bank acts as a trusted, private third party to ensure that both records match.

The blockchain introduces a different third party outside of the private banking system. The radical idea was that the confirming party in transactions was to be a public record, open to be seen and verified by anyone. Every transaction is recorded in a “block” of data and, once that block is verified by the network, it is added to a permanent, immutable chain of previous blocks – thus creating a blockchain. This open, unchangeable record is what makes the assets on a blockchain truly unique and resistant to fraud, as it removes the need for a single, central authority. Imagine a contract between two parties. Then imagine that this contract only becomes valid once the whole world can see it and it thus only becomes legal if everyone agrees. That is the essence of the blockchain.

The difference is that a contract is a unique, non-fungible asset. Because cryptocurrencies are fungible, they can be used to facilitate secure, peer-to-peer transactions without a middleman such as a bank. That is the fundamental idea behind the original cryptocurrencies such as Bitcoin.

The rise of stablecoins

The older digital currencies grabbed headlines due to their volatile price swings and the vast wealth they created for the mavericks who saw the potential early. Stablecoins may prove a more practical innovation. As the name suggests, they are digital assets specifically designed to maintain a stable value, and their value is typically pegged to a fiat currency such as the US dollar or the euro. There are different types of stablecoins, each with a different mechanism for maintaining their peg.

The most common and trusted type is the fiat-backed stablecoin, such as Circle’s USDC. The mechanism is simple: for every digital token created, an equivalent amount of a real-world asset is held in a reserve account. This backing provides trust and stability, ensuring the stablecoin can always be redeemed for its real-world dollar equivalent. Crypto-collateralised stablecoins, such as MakerDAO’s DAI, are backed by volatile cryptocurrencies and use extra collateral to manage risk. Algorithmic stablecoins, such as the failed TerraUSD, rely on complex programs to maintain their value, but can collapse. The recent public failures of algorithmic coins have highlighted the importance of transparent, asset-backed models such as Circle’s.

Circle, formerly Circle Internet Financial, is a prominent US-listed fintech business that has made this model its core mission. Its flagship product is the USD Coin (USDC), but it has since expanded to include the EUR Coin (EURC). The company was founded in 2013 and initially focused on Bitcoin payments before making a strategic pivot to stablecoins. Circle’s history is defined by its commitment to working within the existing financial and regulatory system. From its early days, it actively pursued regulatory approval around the world. It secured key licences in New York, the UK and Singapore.

This dedication to compliance has set it apart. By actively seeking regulatory clarity from the outset, Circle has positioned itself as a trusted partner for financial institutions and businesses. Unlike many of its competitors, rather than trying to replace the financial world order, it is trying to fix it. This is in stark contrast to its main rival, Tether and its USDT coin. Historically, Tether has operated with less transparency and a more decentralised approach, often drawing intense regulatory scrutiny. Tether remains the larger stablecoin by value of currency in circulation, but Circle’s strong focus on trust and following the rules has helped it grow quickly. Because of this, many large investors and businesses see it as a safe and reliable way to enter the world of digital assets.

Circle's new financial infrastructure

Beyond simply providing a digital dollar or euro, Circle is building a new financial infrastructure. This is where the concepts of the off- and on-ramp become critical. The on-ramp is the process of converting traditional currency into a digital one, such as moving dollars from your bank account to a crypto exchange to buy USDC. The off-ramp is the reverse. Currently, these two steps can be a barrier, often involving fees and delays. But the true power of a stablecoin system could lie in a frictionless future where on-ramping and off-ramping are less frequent. Once an individual or business holds their currency in a stablecoin such as USDC, they can transfer it to anyone else in the system instantly, at nearly no cost, and at any time of day. This “always-on” payment rail will bypass the traditional banking system and its associated fees.

This is already happening – in international remittances, for example, where a USDC transfer can take seconds and cost fractions of a penny. This stands in contrast to the traditional system, which can cost upwards of £20 and take several days. In a world of mass adoption, one could even receive a salary in stablecoins, then use them to pay for groceries or bills, all within the same digital system, unlocking a cheap, frictionless, financial life. Circle has actively pursued partnerships with major financial players such as Visa and Fiserv to turn this vision into a reality. These collaborations will allow traditional finance firms to integrate Circle’s technology, helping to bridge the gap and accelerate the adoption of USDC.

Most of Circle’s income comes from the interest it earns on the money that backs its stablecoins. Each USDC and EURC is supported by cash and short-term government bonds, which together provide a steady source of earnings. How much Circle makes depends mainly on two things: current interest rates and how many of its stablecoins are in use. It’s an attractive model, but not without its risks. In a high-interest-rate environment, the firm’s profitability soars. In a rate-cutting world, however, Circle’s revenue from this source would be directly affected.

Acknowledging this dependency, Circle is diversifying its income by offering a suite of software services and customisable interfaces that help businesses integrate stablecoins into their own operations. This includes its Circle Payments Network (CPN), which provides a transaction-based revenue stream that is less sensitive to interest-rate fluctuations. At present, these are small parts of Circle’s business, but they have the potential to become more important as the firm grows.

What the future holds with Circle

Circle’s strategy of working with regulators positions it to be centrally important to an emerging global financial framework. This is no longer a theoretical possibility, especially given the recent passage of the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS, Act. This new US law is the first to set clear national rules for stablecoins. It says that only approved companies can issue them and that they must follow strict rules to protect users and remain transparent. Every stablecoin must be backed one-for-one with safe assets such as cash or short-term US government bonds. Circle has followed this approach from the start and proves it through public reports. The GENIUS Act is a big deal for a company like Circle. Many other stablecoin makers will find it hard to follow these strict new rules, but Circle’s business model was already set up to meet them. This new law provides the clear rules that banks, tech companies and large businesses need. They can now use stablecoins with confidence because the law removes the legal doubts that stopped widespread use before. Additionally, the Act bans stablecoins that don’t follow the rules and sets clear guidelines for foreign companies. This will probably make Circle’s USDC even stronger as a trusted, regulated choice in the market. It punishes companies that don’t meet this new “gold standard”.

By building a trusted, compliant infrastructure, Circle is not simply creating a new cryptocurrency. It is also helping to lay the groundwork for a stablecoin-powered financial system that could one day become the backbone of global commerce. In the process, it has the potential to make the company enormously profitable. The traditional banking world is on notice: the future of finance is here, and it is built on a foundation of stable, digital money.

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“History is just one f**king thing after another,” declares a vulgar schoolboy in Alan Bennett’s play The History Boys. Surveying the past 25 years can feel the same way. From Iraq to the euro crisis and from Brexit to bitcoin, a great deal has happened over the quarter-century that MoneyWeek has graced newsstands. But not all news stories are created equal.

Hazarding a slightly more elegant periodisation than Bennett’s character, I would argue that the great turning point of the past quarter-century was the financial crisis that began in 2007. For the UK in particular, recent history can be neatly sliced into two periods: the years before and after the great crash.

London loses its crown

In the early 2000s, London could credibly claim to be the centre of global finance. It topped Z/Yen’s inaugural Global Financial Centres index (GFCI) in 2007.

America might be the superpower, the argument went, but London was the world’s capital. Britain’s economy was like the tennis at Wimbledon, a venue for global heavyweights to clash, helped by the English language and an excellent time zone.

The past is indeed a foreign country. Where once the “Sir Humphreys” in Whitehall talked of surpassing New York, today they tremble at unflattering comparisons to Greece. The London stock exchange fears irrelevance. Nvidia alone, valued at $5 trillion, dwarfs the combined value of all London’s blue chips. Deal volume has never regained its 2006 peak of $51 billion (it was just $248 million in the first nine months of this year).

While the technology megabucks fly on Wall Street, one of London’s most notable listings this year has been Princes Group, a purveyor of tinned tuna. It is a perfectly respectable business, but there is a certain desperation in efforts by officials to tout this solid, dull flotation as heralding some great renaissance.

Most tellingly, UK living standards have flatlined since 2007. “[Had the] pre-2007 productivity trend continued, British workers would be 16% more productive today,” says Aadya Bahl on an LSE blog. The significance of 2008 is much more evident in Britain than in America, where growth eventually recovered. The S&P 500 index of US stocks has rocketed nearly 900% since its 2009 low (compared with 153% for the FTSE 100). The UK had placed all of its chips on the wealth generated by the City.

When that bet imploded, the country struggled to carve out a new role for itself. Ever-Tiggerish, Americans bounced back from the banking disaster, reinventing themselves as shale-oil prospectors and smooth-talking tech venture capitalists; Britain has more resembled a middle-aged man bouncing between odd jobs after an involuntary redundancy.

Far too easy money

Gordon Brown’s hubristic claim to have abolished “boom and bust” was widely panned as the Great Recession got underway. But in this, the chancellor-turned-PM was only mirroring the wider economic establishment, where the notion of a “Great Moderation” (built on the supposed inflation-fighting genius of central bankers) was all the rage.

Central banks treated us to further financial wizardry after the subprime meltdown by unleashing ultra-low interest rates and the money-printing of quantitative easing (QE). More tranches were added whenever markets started to feel queasy. By the peak in 2021, the Bank of England’s QE portfolio had swollen to £895 billion, or 40% of UK GDP. Contrary to the worst fears, inflation did not immediately rocket. What happened was more insidious.

With credit all but free, risky behaviour went unchecked for years. On Wall Street, the era of ultra-low rates led to some truly daft companies and unworkable business models. The most notorious was WeWork, a poorly run office landlord that somehow convinced venture capitalists it was a ground-breaking tech innovator. Investors threw tens of billions at the idea before it filed for bankruptcy in 2023.

The impact on governments’ behaviour was even worse. Easy money anaesthetised bond markets, removing pressure on states to get spending in order. Although not openly admitted, this was by design. The hope was that cheap borrowing costs would prompt governments to borrow and spend more, thus ending the world economy’s post-crisis slump.

Governments binge on debt

It took a pandemic for the balance of global savings and borrowing to shift decisively. Anyone wondering why interest rates and inflation have spiked so violently of late need look no further than the world’s finance ministries. With furlough schemes, governments got out the credit card, treating tens of millions of workers to a year off. Then came the energy shock after Russia’s invasion of Ukraine in 2022, combined with a pressing need to find more money for defence and an ageing population.

The result has been an explosion in public borrowing. In 2000, UK public debt stood at 37.7%. Today it is 103%, with the Office for Budget Responsibility warning that on the current trajectory it will hit 270% of GDP by 2070. It’s a similar story in most of the developed world.

The mirror image of worsening government credit has been surging gold prices. The yellow metal started the year 2000 at $289 an ounce (oz). Today it trades at $4,035/oz. That 1,294% gain arguably makes it the trade of the century so far, far outstripping the S&P 500’s 365% return over the same period. MoneyWeek is a great fan of the yellow metal, but even we must admit that at current levels, vertigo is setting in.

Bitcoin fanatics will argue that theirs is the trade of the millennium. MoneyWeek has been cautious about embracing the highly volatile cryptocurrency. Claims that bitcoin is “digital gold” are suspect. Bitcoin tends to behave more like a risky asset, rising and falling together with frothy tech stocks, than it does a hedge.

Yet our scepticism is proving hard to maintain. Since its first boom in 2017, the digital currency has gone on to return over 500%. Modish “meme” coins can do even better. Investing is about growing and preserving pre-existing wealth, rather than making a fortune from nothing. Yet pick the right meme coin and you can become wealthy overnight. Still, a lottery ticket can also do that for you.

So much for peak oil

Gordon Brown’s talk of ending boom and bust is far from the only dubious prediction over the past 25 years. During the 2000s, looming “peak oil” was a persistent worry due to the depletion of existing reserves. Credible estimates predicted that production would peak sometime around the late 2000s, before plummeting. Oil prices did in fact rocket at the end of the decade, rising from $30 a barrel in April 2004 (when MoneyWeek suggested readers buy) to more than $140 a barrel in 2008 (shortly before it told readers to sell).

Yet peak oil was not to be. All of that talk of coming shortages only prompted capitalists to go out and find more. In the 2010s, Texan cowboys flooded world markets with shale. Today, peak production is thought to be likely to occur in the early 2030s.

Peak oil was overdone, but the warning that energy was set to become more scarce has proved accurate. As cheaper production sources were exhausted, more marginal reserves such as shale require a higher price point to be economical. At $64 a barrel, Brent crude prices trade at a level regarded as cheap by current standards. But that is still much higher than its $29 a barrel of November 2000.

Emerging markets diverge

MoneyWeek was launched just as emerging markets (EMs) were gathering steam. The first decade of the 2000s was a golden era for developing economies, as China entered the World Trade Organisation, and Asia and Russia recovered from financial crises. From January 2001 to the end of 2009, EM equities gained 200%, compared with a measly 4% in developed markets. The rise of EMs has remained a vital theme, but one that proved messier than expected.

For one thing, growth has had a frustrating tendency to fail to translate into equity gains. The EM index has returned a paltry 28% since the start of 2010. Leadership of the complex has narrowed as Brazil, Russia and South Africa variously stagnated.

Yet defying repeated predictions of an imminent “China crisis”, China has kept on growing, although the recent property bust is proving the most serious test yet. Many developing economies become trapped at the “middle-income” level, defined as GDP per capita of between $1,000 and $13,800. With GDP per head of $13,300 as of last year, China finds itself on the cusp of joining the world’s high-income economies.

Since Covid, the world’s second-largest economy has emerged as a global leader in electric cars and AI. This has not made for very exciting investment returns (the CSI 300 index is still 13% off the level it reached at the height of an investing mania in 2015). But as geopolitical facts go, none is more fundamental to the future than the Middle Kingdom’s growing power.

Don’t buy at the top

Other popular narratives today may also ultimately prove wide of the mark. Tech leaders in Silicon Valley are currently warning that automation could lead to a jobless future, while simultaneously worrying that low birth rates will starve the economy of working-age people. The future, they incoherently claim, is one of both mass unemployment and a chronic labour shortage. Both problems can’t be true at once.

What about Britain? Trying to be optimistic, one might argue that pessimism has reached such an extreme level that it won’t be very hard for growth to surprise on the upside. The FTSE 100 has returned a decent 75% over the last five years.

Yet its performance this century has been dire. Up 52% since MoneyWeek launched, the blue-chip index has given investors a measly annualised return of 1.75% over 25 years (generous dividends on top do soften the pain of sluggish capital growth, though). Measure from the 2003 low, and the index has returned 165%.

No country knows more about investing misery than Japan, one of MoneyWeek’s long-standing favourites. Last year, the Nikkei index regained its 1989 peak; it took 34 gruelling years. The Topix share index has returned 275% since 2013, when Shinzo Abe launched economic reforms, but getting there has involved a long and painful wait.

The investment industry is fond of reminding us that over the long-term stocks tend to deliver an attractive rate of return. Yet that is an average. As grinding returns in the UK and Japan have shown, if you buy near the top, your portfolio’s recovery time risks being counted in decades. Those currently going all-in on the US tech frenzy have been warned.

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After World War II, America and its allies put in place a set of alliances, institutions and power structures to rebuild war-ravaged countries, create geopolitical stability and generate global economic growth. This post-war order has endured – with one important change – for much of the following eight decades.

The fall of the Berlin Wall and the dissolution of the Soviet Union seemingly marked the end of any alternative to Western capitalism and liberal democracy as the main global economic system. However, in recent years, it has become increasingly obvious that the ties holding this US-dominated system together are fraying and are likely to break.

We are heading into a new world that is likely to be more unstable. In a symbol of this change, on 5 September this year, US president Donald Trump signed an executive order renaming the Department of Defence as the Department of War. This restores the name that it carried from 1789 until 1947 and points to the rising risks of conflict in the years ahead.

So how should investors position themselves for what comes next? What areas that are currently under-represented in most portfolios should they consider for diversification and protection?

Rivalry and conflict between the US and China

The main question is how the shift from a single superpower to two contending nations – the US and China – will affect global supply, demand and the efficiencies of comparative advantage. Free trade has generated huge gains since the end of the Second World War, and even more so since the end of the Cold War. This is now clearly under threat.

With the end of the post-war order comes the new “Great Game”. This name was originally given to the struggle between Britain and Russia for influence in Central Asia (Afghanistan and Persia). This time, the strategic rivalry and political conflict is between the US and China. Paradoxically, it is America that is now pursuing a more inward-looking strategy under Trump’s Make America Great Again (MAGA) banner, while China aims to build economic and political alliances through its Belt and Road (BRI) and Global Development Initiative (GDI) projects.

While America strives to bring its manufacturing base back onshore, Europe is now having to divert budgets from social welfare to rearmament. Both are now in stiff competition with China to electrify the planet and build digital infrastructures. This will inevitably lead to global competition for resources across energy, metals and critical minerals.

This is leading the two superpowers to weaponise their core strategic advantages. For America, this is the US dollar, still the world’s global reserve currency. For China, it is a stranglehold on rare earth elements and critical minerals.

China needs an alternative to the dollar

Freezing and confiscation of assets and denial of access to global payments systems is forcing non-US aligned countries to look for an alternative store of wealth and means of exchange. Herein lies the potential significance of the Brics+, the informal name for the original group of five key emerging-market powers – Brazil, Russia, India, China, South Africa – plus other countries that have begun joining them for summits and policy coordination. Some see this group as a counterpart to the G7 group of developed economies. Initiatives by the Brics+ members so far include work on a development bank, central-bank cooperation and an international payment messaging system.

Any alternative to the dollar looks increasingly likely to be a form of tokenised, asset-backed digital currency. This explains why many central banks closely aligned with the Brics+ nations have been large buyers of gold and other precious metals.

If the creation of a new currency system seems far-fetched, it is worth a quick review of the genesis of the post-war order: the Bretton Woods Agreement of 1944. China is a great student of history, and this agreement provides an template for how new world orders are created. While World War II was still raging, more than 700 delegates from 44 countries met at Bretton Woods in New Hampshire in the US to work on a new global monetary system. The goal was to create a globally efficient foreign exchange market, prevent competitive currency devaluations and promote global economic growth.

John Maynard Keynes, one of the principal economists at the meeting, proposed creating a new international reserve currency called the “bancor” and setting up a global central bank called the “Clearing Union”. However, these proposals were eventually watered down by the US Treasury in favour of a more prominent role for the US dollar, whereby the dollar would be pegged to the price of gold, and other participating currencies would be pegged to the dollar. The agreement was fully implemented in 1958, pegging the US dollar to gold at $35 per ounce.

This system functioned until the early 1970s when it became evident that US gold reserves were not adequate to sustain the peg. This caused a run on gold, forcing first a temporary suspension of the dollar’s convertibility into gold followed by complete collapse of the agreement in 1973. US president Richard Nixon also imposed a 10% tariff on all dutiable imports to force its major trading partners to adjust their currencies upwards and trade barriers downwards. Does this sound familiar?

China has already taken the strategic initiative to convene the Brics+ group of nations. It has established the Shanghai Gold Exchange – and associated physical storage – and now holds a significant percentage of its reserves in gold. It has shown little desire to replace the dollar with its own currency – internalisation of the renminbi would erode the ability to operate capital controls – but it and its allies need an alternative to the dollar.

Given China’s embrace of technology and advanced domestic digital-currency adoption, it does not feel far-fetched to envisage it launching a Bretton Woods-style gold-backed digital currency for those unable or unwilling to access the US dollar system. Crypto tokenisation is the vehicle, not the asset.

China's control of strategic resources

China’s strongest bargaining chip lies in its control of rare-earth elements (which are used in magnets, electrification, lasers and optical devices, catalysts and emission controls and radar/guidance systems), as well as critical minerals, that have broader energy, industrial and defence applications.

China has this control because, while the West focused on the comparative advantage of outsourcing its production to countries with lowest costs, China focused on building an end-to-end supply chain comprised of exploration, mining, refining and industrial manufacturing. With its looser environmental controls, it has come to dominate the global supply of these critical minerals.

In the tit-for-tat game of tariffs and sanctions, China is able to leverage its position in the one area where the US is completely vulnerable. So just as China and its allies have no alternative but to develop a competitor to the US dollar as a store of wealth and means of exchange, the US and Europe now see they have no choice but to develop alternative sources for mining and processing capacity to break this reliance. Exacerbating the situation, America’s prioritisation of its own MAGA agenda over historical alliances has left Europe and other previously US-aligned countries to build their own rather than collective resources.

If investors believe the post-war order is irretrievably compromised, they should consider investments that give exposure to these themes. Gold and precious metals for hard assets. Tokenisation and chips to enable digitalisation. Energy and power generation, rare earth elements and critical minerals, which will be in demand as both sides try to secure supply chains. And US and European defence stocks as the West joins in the new arms race.

Investors have many ways to access these ideas, including individual stocks, thematic exchange-traded funds (ETFs) or exchange-traded commodities (ETCs) that hold physical metals. Listed commodity futures and options are also becoming increasingly accessible, as major exchanges such as the Chicago Mercantile Exchange (CME) roll out mini and even micro contracts, which are 1/10 or 1/100 of the size of standard contracts and require less up-front capital. Such instruments are only suitable for experienced investors, but they offer a way to quickly add hedges or speculative positions to a portfolio – something that will become more valuable in a fast-changing world.

James Proudlock is managing director of OptionsDesk.

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Rob Granieri is “the last founder standing” at Jane Street – “the black-box money machine” currently “minting Wall Street records”, says Bloomberg. But he’s almost impossible to pin down – guarding his “low-key stature” so tightly that he often goes unrecognised, even in his own company, where he officially has no title. His profile in the employee directory stands out for its missing headshot.

If you want a sighting of the “schlubby” billionaire recluse, you’re better off looking beyond Wall Street. The “soft-spoken libertarian” is most at home at alternative gatherings: notably that “mecca of counterculture”, the Burning Man festival. Another favoured haunt is the Scarlet Pearl casino in Mississippi’s Biloxi Bay – a family affair he helped build and finance.

Still, “invisibility has grown harder to maintain” as Jane Street’s profits have exploded, says the New York Post. The firm, which some have dubbed the world’s most lucrative trading house, has enjoyed such breakneck growth over the past five years – at the vanguard of the exchange-traded fund boom – that it accounted “for nearly a quarter of all US-listed ETF trading volume last year”. “The amount of money they make is almost obscene,” one former analyst told the Financial Times, which describes the “quirky and opaque” outfit, renowned for spotting arbitrage opportunities, as one of the “new titans of Wall Street” – frequently trouncing establishment rivals. Jane Street’s $21.9 billion trading revenues in 2023 were “equivalent to roughly one-seventh of the combined equity, bond, currency and commodity trading revenues of all the dozen major global investment banks”. The arrival of bitcoin ETFs the following year put another rocket under revenues. As of June this year, it had already pulled in $17 billion.

Granieri, now 53, always “harboured ambitions to make a lot of money”, says Bloomberg. After graduation in 1992, he printed a stack of CVs and dropped them off on each floor of Philadelphia’s tallest buildings. The strategy worked. He scored a job at Jeff Yass’s Susquehanna International Group, “the quant-trading firm that was quietly becoming a market behemoth,” and was soon pulling in $700,000 a year. But, itching for change, he teamed up with two other traders to form the firm that became Jane Street in 1999.

Rob Granieri: into the limelight

Being dragged into the limelight by success is one thing. Sadly for Granieri, Jane Street is increasingly under scrutiny for other reasons, too. Most serious, says Bloomberg, is an accusation by the Indian regulator of “rigging the world’s largest options market”, which the firm has vowed to fight. The collapse of Sam Bankman-Fried’s FTX crypto exchange, and subsequent high-profile fraud trial, also shone unwelcome light on the firm’s culture – “SBF” spent his early career there, personally recruited by Granieri. “Having Jane Street on the CV was a crucial bit of Bankman-Fried’s sales pitch,” notes the FT. Yet the lax office vibe at FTX was a partial mirror of Jane Street’s, where Granieri “has inculcated a culture that mirrors his quirks”, says the New York Post.

The wider worry, says the FT, is that Jane Street’s “tight-knit” corporate culture no longer fits its size and global clout. The firm is run by roughly 40 equity partners with no traditional management structure: a recipe for a lack of accountability, say critics. Much depends on the outcome of the Indian investigation. The worse-case scenario for the firm is that “the temporary block on activities” imposed there could spread to other jurisdictions as regulators dig deeper. One of Granieri’s few personal indulgences is fine dining. Why cook, he jokes, when you can “eat at Le Bernardin every night”? Given his woes, he could be forgiven a spot of comfort eating.

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As autumn gets underway, many will start thinking about where to travel in the new year. January may bring resolutions, but October is often when we start planning.

And so it begins. Twenty tabs open. You go down a rabbit hole of when is the best time to book flights, how to get airport lounge access for less, and how much to tip in different parts of the world. A luxury cruise may sound appealing, but so does lounging by the pool in a high-end hotel.

The decisions go on, the spreadsheets grow bigger, but the question remains: where should you go on holiday next year? We take a look at the trends for travel in 2026.

Where to travel in 2026

Travel group Expedia has just released its Unpack ’26: The Trends in Travel report, revealing where different trends are taking holidaymakers. The data has been compiled based on increases in flight and accommodation searches for travel on 1 January to 31 December 2025 versus the same period in 2024.

Not all these destinations are the typical go-tos, with more visitors seeking under-the-radar coastlines and higher altitude hideaways.

We’ve compiled all the results and delve further into each destination below.

Source: Expedia

1. Big Sky, Montana, US

Being close to Yellowstone National Park is only part of the attraction. What brings travellers to this unincorporated community in Montana is – as the name suggests – a vast blue sky and mountains, as well as lots of skiing. While it’s a bucket-list destination for many Americans who enjoy winter skiing, it makes for a great place for Brits who have made more than a few visits to the Alps and are after a new holiday hotspot. Another thing not to miss is luxury fly fishing, a unique experience for anyone who wants to try their hand at angling.

2. Okinawa, Japan

With more than 150 islands to its name, Okinawa is set apart from the rest of Japan not just geographically, but also culturally. There is plenty to keep you entertained; you can lounge on white-sand crescent moon-shaped beaches, whale-watch on a cruise, visit World War II sites and feudal castles, and, if you time it right, even attend the Naha Great Tug-of-War Festival. If you’re lucky, you may be able to catch cherry blossoms blooming in the early months of the year.

3. Sardinia, Italy

This Mediterranean island offers a retreat away from the bustling mainland. It’s packed with fishing villages where you can get around on a Vespa, a rich Roman history that explains why there are Gothic cathedrals in the capital city of Cagliari, and another quick history lesson will tell you why some Sardinians speak Catalan. To the north of the island, in Costa Smeralda, you will find luxury yachts and high-end properties occupied by the rich and famous.

4. Phu Quoc, Vietnam

It’s widely agreed among Vietnamese people that the best fish sauce comes from Phu Quoc – after all, that’s where it originated. Its palm-fringed beaches and forested hills have now become an attractive holiday destination for people across the globe, who come for eco-retreats, seafood dishes, and blue-green waters. It’s also worth arranging for a pepper farm tour, as the island is known for the spice.

5. Savoie, France

France’s Savoie region is nestled in the heart of the French Alps, making it a haven for those who love winter activities. At the foot of the mountains, you will find two turquoise lakes where you can take part in water sports such as canoeing, canyoning, paddleboarding and more. You can also visit a 12th-century tomb site, walk around charming villages, and hike in the unspoilt nature.

6. Fort Walton Beach, Florida, US

Often overshadowed by Florida’s more famous beaches in the south, Fort Walton Beach in North Florida is an inviting destination with powdery white sand and striking turquoise waters. It’s an ideal location for those who love the outdoors – you can spot dolphins in the wild, sample fresh local seafood, browse the flea markets, go for wildlife trails either by foot or on a bike, and explore 12,000 years of Florida’s indigenous past at one of the many museums.

7. Ucluelet, Canada

Tucked away on the edge of Vancouver Island, Ucluelet is where holidaymakers go to unwind and relax. It offers sweeping views of the Pacific Ocean and one of Canada’s mildest winters, as it rarely snows. A highlight of your visit is likely to be storm watching, made possible by the area’s year-round coastal weather. Outdoor enthusiasts can also fish for giant chinook salmon and halibut, hike through lush rainforests and alongside rugged coastlines, or explore centuries-old cedar groves.

8. Cotswolds, UK

Cotswolds is often best known for its honey-coloured cottages and rolling hills. But beyond the postcard charm, you’ll find walking trails, lively market towns, arts and crafts festivals, and historic estates that offer the best of heritage and comfort. It makes for an ideal luxury staycation for Brits, as visitors can enjoy the small villages, meadows and ancient woodlands. Don’t forget to sample English wine, local cheeses and meats.

Read more about MoneyWeek’s recent visit to The Lakes by Yoo, a luxury lakeside holiday rental in the Cotswolds.

9. San Miguel de Allende, Mexico

This small city captures a wealth of Mexico’s aesthetics in a single location: baroque churches, cobbled lanes and bougainvillaea on every wall. Despite being a popular destination due to its thriving art scene, the town has still retained its striking neo-Gothic towers, old Spanish colonial buildings, and open-air markets. You can get Mexican mole (a type of sauce), Mezcal, and a near-perfect climate to enjoy your days off.

10. Hobart, Australia

Tasmania’s capital city is brimming with history, architecture and world-famous art. Once a British penal colony, it’s now famous for its local produce, a thriving wine scene, and historic theatres that have been graced by famous names such as Laurence Olivier and Hugo Weaving. You can spend time learning about the culture of Tasmania’s indigenous people, board a vintage ferry and cruise down a scenic river, or hike Mount Wellington for a sunset to remember.

Paramount’s new boss is adamant he intends to keep “politics at arm’s length”. Good luck with that, says Vanity Fair. After this summer’s $8 billion takeover by Skydance, David Ellison, 42, is in “the hot seat” of an impassioned national debate about the future of the media juggernaut and whether it has been captured by Donald Trump.

As CEO of the newly formed Paramount Skydance Corporation, Ellison’s first big appointment has fanned the flames. In a controversial acqui-hire, he is paying $150 million to buy Bari Weiss’s news site, The Free Press, and installing the journalist entrepreneur as editor-in-chief of CBS News. Her pro-Israel and anti-woke views have fuelled speculation that she’ll act as an “ideological commissar” at CBS, helping to “enforce compliance” with the White House line.

This is certainly an “almost existential” moment for the near 100-year-old network, whose new owners have been accused of “kowtowing” to the president after settling a vexatious $16 million lawsuit to get the deal over the line, and cancelling comedian Stephen Colbert when he described it as a “big, fat bribe”.

Ellison is hardly the patsy “nepo baby” of a Maga-leaning patriarch he’s sometimes portrayed as. Described as modest, well-mannered and popular, he’s the opposite in temperament to his volatile, irascible father, Larry – who bankrolled Skydance’s takeover, and last month briefly became the world’s richest man thanks to the soaring share price of his company, Oracle. But he has inherited the latter’s drive – credited in Hollywood for building Skydance, which he founded in 2010, into one of the industry’s strongest independents. “I don’t know his plan, but I would bet on that kid any day of the week,” former Paramount Pictures president Adam Goodman told The Los Angeles Times. He has “an institutional knowledge and appreciation for the studio’s history, and a real love of movies”.

Born in 1983, to Larry Ellison and his third wife Barbara Boothe, David grew up on a horse farm in the San Francisco Bay area and was an intern at Oracle during high school. He eventually enrolled at the University of Southern California’s School of Cinematic Arts, dropping out to act in a $60 million movie about World War I pilots, Flyboys, part-financed by his father, which spectacularly flopped.

There’s no question Ellison “was gifted a head start”, says Bloomberg. Not many young Hollywood wannabes get to raise $350 million from JPMorgan for a production company. But it’s what he did with the cash that counts. He got a taste of success right at the start with the release of the Coen brothers’ True Grit, which grossed more than $252 million globally, following that up with several other blockbusters.

Still, the huge Paramount deal takes things to a new level. To secure it, Ellison had to wrestle with the Redstone family and their shareholders – while trying to prevent Trump from derailing the deal. “The reward for his patience is a company in decade-long decline,” stuffed with ancient networks and a “withered” film studio.

David Ellison is gunning for Warner Bros

Less than two months after swallowing one ailing media giant, Ellison is now looking to take down a much bigger one. Nothing captures his ambition better than his interest in Warner Bros. If he wins the $50 billion giant, the combined behemoth would boast the largest share of the national TV advertising market, the biggest movie studio output and a pair of streaming services (Paramount+ and HBO Max) that together sell more US subscriptions than even Netflix, says The Economist. Add CNN to CBS – and throw in Larry Ellison’s interest in the US operations of TikTok – and the family will become a mighty force in both old and new media. The question is what they do with that power.

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My hope when markets began to wobble earlier this year was that the spotlight would start to shift a little bit away from US equities. This isn’t because I’m a committed bear on America. Yes, I am uncomfortable with how much a typical global portfolio will now have in pricey-looking US stocks when domestic politics are clearly becoming less business-friendly. However, that is about managing risk rather than a firm certainty that the tech boom has yet run its course.

Instead, my concern is that the amount of commentary that hinges on the US market, US economy and US politics – indeed, anything wrapped in the stars and stripes – has become monomaniacal. Markets have far too little idea what is happening elsewhere. Take the entire UK stock market, which is dying in part because there is so little attention paid to the small- and mid-cap segment that it no longer functions. The number of take-private deals at large premiums to the undisturbed price testifies to that.

When MoneyWeek was founded 25 years ago, analysis and commentary in the industry and the media included a range of sectors, countries and assets every week. Coverage began to decline after the financial crisis and worsened as the tech boom and the strong dollar sucked in capital. Now, many areas are neglected for long periods.

Investors are noticing emerging markets again

Consider emerging markets. I wrote about this shift relatively recently, but it bears repeating. After ages in the doldrums, they are having a good year: the MSCI Emerging Markets index is up by 16% in sterling terms in the first nine months (developed markets are up 8%, the US is up 6%). Yet that scratches just the surface of the changes: within the EM universe, India – the main bright spot of the past decade – is off 8%, while China has rebounded 29%. Korea is up 44%. Emerging Europe and Latin America are all doing very well. One cannot argue that there have been major economic or political shifts in most of these countries to change the case for them. The conclusion is that many are simply being noticed once more as flows into the US slow down.

The wider point here is not about emerging markets, but about the merits of keeping some of your portfolio in assets that are sensibly valued even when they are lagging. As private investors, we don’t need to worry about measuring our performance against a benchmark. Our goal is not to wager everything on the top-performing stocks and collect a performance fee. We aim to maximise our odds of earning a solid return and minimise our risks of devastating losses. Paying attention to out-of-favour assets is part of this.

As a final note, the MoneyWeek Wealth Summit – our annual event and MoneyWeek’s 25th birthday – on 7 November in London will run along these lines. Yes, it’s called Turmoil, tariffs and Trump 2.0. Yes, we have a session on AI. But our speakers will be looking at growth, value and wealth-preservation opportunities to suit a world that is mostly not America.

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They say health is wealth, but healthcare investors might disagree. The sector has had a tough time over the past few years. Policy noise in the US has been a major headwind recently, but even before that investors’ focus was drawn elsewhere as areas such as technology raced ahead. “For the 30-year period from 1989-2019, the US healthcare sector closely tracked technology returns, and with considerably lower volatility,” notes Michael Cembalest in a research paper for JPMorgan. “Things have changed since then.”

The MSCI World Health Care index has delivered five-year annualised returns of less than 6%, lagging the broader MSCI World index at 13%. The MSCI World Information Technology index has delivered 17% over the same period. Sentiment about the sector has soured further in 2025 – and it is easy to understand why. The US is the world’s largest healthcare market and when Donald Trump was inaugurated in January, he promptly appointed a vaccine-sceptic as his health secretary. This set the tone for what was to follow.

There are three key threats: efforts to control drug pricing, tariffs and possible tax changes. There is little doubt the sector is trading cheaply. The question is whether it offers good value in light of the risks.

Three big, beautiful policy risks

Donald Trump thinks US customers are being ripped off when it comes to drug pricing. He told reporters that a friend in London pays $88 for a weight-loss treatment that costs $1,300 in New York. So earlier this year, he published an executive order demanding “most-favoured nation” prices for US customers – an attempt to bring US prices in line with the lowest costs offered elsewhere. Pharmaceutical companies have been threatened with “every tool in the federal government’s arsenal” if they refuse to step up. The threat is vague, but has nevertheless created nervousness.

The majority of global pharmaceutical profits come from the US market – around 70%, according to the University of Southern California. Rather than cutting prices in the US, companies could simply decide to pull out of less lucrative markets, reducing access to drugs for patients and denting pharmaceuticals’ profits.

The second threat is tariffs. Trump is keen to boost US manufacturing and is using tariffs as a way of doing so. He has announced a 100% levy on imports of branded or patented drugs from 1 October, although manufacturers that are building a site in America will be exempt. Tariffs aren’t the only tax investors need to consider either. The Trump administration also has an eye on corporate income-tax loopholes that pharmaceutical companies have been exploiting. Pfizer paid zero in federal taxes in 2019 despite selling $20 billion of drugs in the US, according to an investigation from the US Senate Finance Committee. This was due to round-tripping – a mechanism whereby income from US sales is treated as foreign for tax purposes. Ways of achieving this can include using offshore manufacturing or shifting intellectual property rights to tax havens. “We’re going to try and fix a whole bunch of these tax scams,” said commerce secretary Howard Lutnick, speaking on a podcast in March.

Is this all as bad as it sounds?

Some of the risks might have been overstated. Look at “most-favoured nation” pricing. There is scepticism about whether Trump will actually be able to implement it on any kind of scale. In his first term, he tried to control the price of a handful of drugs covered by Medicare, but was blocked by a federal judge. Wide-sweeping price controls this time would almost certainly require the support of Congress – something Congress doesn’t seem to have the appetite for.

Meanwhile, pharma companies have been making moves to try and get ahead of tariffs. The measures that kick in from the start of October only affect companies that aren’t building a site in the US. In recent months, scores of companies have been making commitments. In July, Swiss and UK giants Roche and AstraZeneca both pledged $50 billion in investments in the US over the next five years, building and expanding research and development and manufacturing sites. AstraZeneca said its goal is for 50% of revenue to be generated in the US by this date.

US pharma companies have also made big commitments to domestic manufacturing. Earlier this year, Eli Lilly pledged an additional $27 billion for four new plants, and Johnson & Johnson announced a $55 billion investment over the next four years.

While this will help the industry navigate tariffs, it is possible that some companies will lose tax advantages by moving their manufacturing facilities to the US. Karen Andersen, research director at Morningstar, says analysts have been building a ramp up in tax rates into their models over the next few years as the reorganisation goes through.

Healthcare stocks are going cheap

Headwinds in the sector mean valuations look cheap. The MSCI World Health Care index is trading at around 16 times its forecast earnings, compared with 20 times for the MSCI World index. Individual names are trading on lower multiples. “Pharma stalwarts such as Merck, Pfizer and Bristol Myers Squibb trade at forward price/earnings (p/e) ratios of just eight to nine times, and biotech trades at one of the largest valuation discounts in the market,” notes Cembalest. The question is whether it is worth it given the risks.

On the one hand, we are starting to get a better sense of how Trump works. Recent stockmarket reactions have been less pronounced as a result. In July, Trump sent letters to 17 pharmaceutical companies threatening repercussions if they didn’t adopt most-favoured nation pricing. Investors largely shrugged off the news. Markets have also taken the latest tariff announcement in their stride. “Investors see more bark than bite,” says Lale Akoner, global market analyst at investment platform eToro. The objective of tariffs is to force supply chains onshore in the US – not to raise prices at the pharmacy counter. “European pharma gets nudged to localise, while US firms gain a policy tailwind.” That said, valuations are likely to remain suppressed for as long as the policy outlook is uncertain. Consider most-favoured nation pricing. Trump’s plan sounds overly ambitious, but “the problem is that the impact is so big that it’s a difficult risk for the market to ignore, no matter how unlikely it might be,” says Andersen.

Is investing in healthcare stocks worth the risk?

One fund manager who has been investing in the field for 25 years told me that every time there is nervousness around pricing in the US, the sector underperforms. “Before buying more of this stuff, investors need clarity on the earnings forecast,” says Gareth Powell, head of healthcare at Polar Capital. We could get more certainty over the coming months. The deadline given to pharma giants for complying with Trump’s price demands was 29 September. Further detail on tariffs has already emerged, but there are still questions about how regions with pre-existing trade deals will be treated.

“Headlines about the imposition of 100% tariffs on branded drugs appear to contradict the previously discussed 15% cap for European firms,” say Ailsa Craig and Marek Poszepczynski, co-managers of the International Biotechnology Trust. Until these pieces of the puzzle fall into place, bargain-hunting in the sector requires bravery.

On the plus side, there have been some bright spots. Biotech investors point to pro-industry noise from the FDA regulator, including a pilot programme to reduce the review time on new drugs and therapies from 10 to 12 months to just one to two, if they meet certain criteria. This is a marked improvement from earlier this year when investors were worried that mass firings at the FDA would result in a slower approval processes.

Active investors can also adjust their portfolios to manage the risk associated with policy threats. “The way I would look at it is on a case-by-case basis,” says Andersen. Is the company particularly reliant on government reimbursement for one of its key products? Does it have a significant manufacturing footprint outside of the US? One way the International Biotechnology Trust is managing the risk is by tilting into rare diseases, with more than 30% of the portfolio allocated to this theme. “This tends to be much more similar in price in both Europe and the US,” says Craig, meaning therapies should be less exposed to Trump’s interference with drug pricing.

Where to invest

If you are looking for broad exposure to the sector, the Polar Capital Global Healthcare Trust (LSE: PCGH) is one to consider. The trust has large overweight positions in healthcare equipment and biotechnology. It is underweight on pharmaceuticals relative to the benchmark – a position driven by concerns about the impact of Trump’s pricing threats on mega-cap pharma companies. Those who prefer passive exposure could look at the Xtrackers MSCI World Health Care ETF (LSE: XDWH), although today’s volatile policy backdrop could better lend itself to active stockpickers.

The area that looks most interesting in my view is biotech. This is where most of the innovation happens, with big pharmaceutical companies swooping in to acquire biotech firms that are developing a promising drug. We should see more merger and acquisition (M&A) activity over the coming years as a significant patent cliff-edge is looming for big pharma. Drugs worth $180 billion in annual revenue (equivalent to 12% of the global market) will be coming off patent in 2027 and 2028, according to figures cited in the Financial Times. This is putting pressure on pharma companies to shop around for new products in the biotech sector.

The International Biotechnology Trust (LSE: IBT) gives exposure to this part of the market. The managers have had strong success identifying acquisition targets, with 30 portfolio holdings having been snapped up through M&A since 2020. Investing in biotech is a risky business, but the trust is heavily weighted towards companies with drugs in late-stage clinical trials, as well as those that have completed trials already and are waiting for approval from the regulator. This makes it a good pick.

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Gold prices are surging once again, and this time, they are being spurred on by a constitutional gridlock that has caused the US government to shut down.

Republicans in the Senate had been pushing to pass a bill that would have extended government funding, but failed to attract the Democrat support needed to reach the 60 votes required.

Democrats were holding out for health care policy reforms in order to lend their support to the bill. Without either side having budged, both are now blaming each other for the shutdown, which will see certain parts of the US government temporarily cease to function.

This is the first time the US government has closed down since 2018, during Donald Trump’s first term in the White House.

Assuming the shutdown isn’t too lengthy, economists don’t expect it to have a major impact on the US economy. Ryan Sweet, chief US economist at Oxford Economics, for example, has stated that the shutdown won’t change the company’s outlook for US GDP, unemployment or inflation in the near term.

But Sweet did say it could impact the timing of any future Federal Reserve (Fed) rate cuts.

“The Federal Reserve emphasized the September move as an insurance cut,” said Sweet. “A shutdown would likely leave the central bank in a fog about the labor market, fueling support for an October cut rather than risk falling behind and having to cut more later.”

Falling US interest rates are typically a bullish signal for gold investors. But this isn’t the only reason why the US government shutdown is boosting gold prices.

How the US government shutdown is boosting gold prices

The gold price rally has been ongoing since 2024. The US government shutdown is just the latest development that is fuelling its run.

It has helped make September a standout month for gold, though. Gold prices have increased 12% from $3,476 on 1 September to their latest all-time high of $3,895 a month later.

Gold is typically seen as a safe-haven asset. Political instability of any kind tends to see investors turning to the precious metal in order to protect their wealth.

That applies double when it comes to the US, given the country’s dominant position in the global economy and the dollar’s status as the world’s reserve currency.

"The US government shutdown has increased investor uncertainty, delaying Friday’s key jobs data," said Russell Shor, senior market analyst at Tradu.com. "This has strengthened demand for gold as a safe-haven asset, while expectations of further Fed rate cuts have pushed prices higher."

The shutdown is also fuelling pessimism over the US dollar, in which gold prices are typically quoted.

“The dollar slipped again overnight,” said Emma Wall, chief investment strategist at Hargreaves Lansdown on 1 October, the first day of the government shutdown. “The outlook is not positive if previous lockdowns are any indicator.”

This latest fall in the dollar further extends one of the other longer-term drivers of the gold price rally: ‘dedollarisation’.

“Emerging markets have turned away from the US dollar as a store of reserves in order to reduce their dependence on the US, instead favouring gold,” said Wall.

While a weakening dollar inherently pushes up gold prices (as it takes more dollars to buy the same amount of gold), the recent rally has transcended this impact.

“Gold prices recently hit an all-time high in real terms, exceeding the safe-haven asset’s previous inflation-adjusted peak from 1980,” said Shannon Saccocia, chief investment officer, private wealth at Neuberger.

What the US government shutdown means for gold and other investments

While gold prices rose in the days leading up to the shutdown, the reaction of the stock market was more reserved.

The S&P 500 rose for three consecutive sessions up to 30 September, the eve of the government shutdown. At time of writing, S&P 500 futures are down 0.5% on the morning of 1 October, suggesting that these gains are about to reverse.

“Historically shutdowns have been bad for the US dollar, bad for US equities, and bad for bonds too,” said Wall.

If the shutdown becomes drawn out, it could have a negative impact on the US economy.

“The economic costs increase the longer the shutdown drags on,” said Sweet. “Our estimate is that a partial government shutdown reduces GDP growth by 0.1-0.2 percentage points per week.

“For context, a shutdown that lasts the entire quarter, which has never occurred, would reduce Q4 real GDP growth by 1.2-2.4 percentage points.”

The US has been the centre of the global economy and stock investing for decades, so much so that it has come to seem unassailable.

However, last year saw numerous challenges to the notion of US exceptionalism: a belief that the US is qualitatively distinct and superior to other nations.

A glance at the US stock market’s performance compared to other regions over recent years appears to justify this belief. The S&P 500 outperformed the MSCI World Index (an index that seeks to capture the global stock market) over the last three-, five- and 10-year periods.

But in 2025, US stock market dominance was rocked by several events.

The emergence of DeepSeek, for example, sent the S&P 500 down 1.5% in a single session because it struck right at the heart of the idea that US companies had a de facto monopoly over the development of cutting-edge artificial intelligence (AI).

That was followed by market turmoil in April following ‘Liberation Day’ tariffs, as well as fears that the AI bubble could burst, especially during the second half of the year.

It added up to the FTSE 100 outperforming the S&P 500 over the course of 2025 for just the third time in the last decade.

“Momentum has cooled a little as investors weigh up [US president Donald] Trump drama against what should be a strong earnings season,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown, following the S&P 500’s second consecutive weekly decline in the week to 23 January.

The S&P 500 gained just 1% in 2026 through to that date; the FTSE 100 gained double that amount, while the Euro Stoxx 50 gained 2.6%.

Is the age of US stock market dominance over? And where should you invest for 2026 if so?

The US economy is still going strong, but is that good for stocks?

Revised estimates released on 22 January showed the US economy grew faster than expected, at 4.4%, during the third quarter (Q3) of 2025 – its fastest pace of growth since Q3 2023.

According to Hugh Gimber, global market strategist at J.P. Morgan Asset Management, 2026 “should be a reasonable year for the US economy”, with Trump keen to pull whichever levers he can to get the economy and the stock market on a positive footing ahead of midterm elections in November.

However, analysts at Bank of America have questioned whether or not that is good news for the US stock market. A team of analysts led by Savita Subramanian, equity and quant strategist at Bank of America Securities, published a report on 23 January observing that US stocks (counterintuitively) tend to underperform when GDP and earnings per share (EPS) growth are both high.

“Stocks anticipate recoveries, tend to rally most on ‘disaster averted’ scenarios – when expectations are low,” said Subramanian. The bank’s current GDP and EPS forecast are “more consistent with middling equity returns”.

Subramanian also observed that “the index is top-heavy in AI, not GDP-sensitive stocks” and relatively light in the more cyclical companies that would respond positively to strong economic growth.

What does dollar weakness mean for US stocks?

There is a further headwind to US stocks in the form of the weakening US dollar.

American investors will be very happy with the returns their domestic stocks have generated of late, but investors from overseas might have cause for concern.

In the week to 23 January, the returns that different investors would have realised varied by their base currency.

“Dollar-based investors saw gains, but sterling and euro investors registered losses thanks to a near-2% drop in the dollar’s global value,” said John Wyn-Evans, head of market analysis at Rathbones. “That raises the risk of money illusion for US investors, whose rising portfolios may mask declining international purchasing power.”

Wyn-Evans observed that the dollar is threatening to fall below the bottom of its long-term trading range, at the same time as silver and gold prices are surging to new all-time highs.

How to invest for the end of US exceptionalism

If you believe the era of US exceptionalism is over, there are some steps you can take in order to protect your portfolio.

One means of gradually diversifying away from the US would be to feed future investments into a global ex-US tracker instead of a global vanilla fund. By doing so, “an investor would slowly be able to dilute their exposure to America”, said Dan Coatsworth, head of markets at AJ Bell.

Coatsworth highlighted Xtrackers MSCI World Ex-USA ETF (LON:XMWX) as one of the most popular choices of global ex-US funds.

You could also invest in some global markets outside the US that are more overlooked. Coatsworth highlighted “greater appetite for UK, European and Japanese investments” through 2025, with all three regions’ major indices having outperformed the S&P 500 so far in 2026.

With the spring holiday season approaching, investors may be wondering: is the stock market open on Easter? The answer to this question is: no. The UK stock market will be closed on Monday, 6 April, for Easter Monday.

The stock market is also closed on Friday, 3 April, to observe Good Friday.

Typically, UK stock market opening times are 8am to 4.30pm Monday to Friday with a small break between 12pm and 12.02pm. This can vary depending on public holidays and major events, such as Christmas Eve, when markets close earlier than usual.

Investors gearing up for the end of the tax year will need to make sure they’re ready for the big money changes in April.

But with markets getting unpredictable due to the ongoing war in Iran, investors may want to prepare their portfolio for high inflation. Check out our weekly share tips guide to get an idea of where to invest.

Below, we look at UK and US stock market opening times during Easter, and how it will impact trading on those days.

Is the stock market open on Easter?

No. The UK stock market is closed on Easter, which falls on Monday, 6 April. This is part of the eight standard holidays observed by the stock exchange in the year.

The London Stock Exchange only observes English bank holidays – not Scottish, Welsh or Northern Irish holidays. For instance, Easter Monday is a bank holiday in England, Wales and Northern Ireland but not in Scotland. It’s a non-trading day for the stock market.

The UK stock market is also shut on Friday, 3 April, for Good Friday, which means the trading will cease for four consecutive days.

We look at the key money dates for 2026 for those who want to stay on top of their finances in the new tax year.

When is the UK stock market closed in 2026?

Below is a list of UK stock market holidays to help you plan your trading activities accordingly.

Source: London Stock Exchange

When is the US stock market closed in 2026?

If you invest in US stocks, also look at the New York Stock Exchange (NYSE) and Nasdaq’s open times and upcoming holidays this year.

Both stock exchanges’ standard opening hours are Monday to Friday 9:30am to 4pm Eastern Standard Time (EST) time, which is 2:30pm to 9pm BST in the UK.

Is the US economy pulling ahead of Europe?

Yes. Twenty years ago, the US economy and Europe's were broadly comparable in terms of size and share of global GDP, and in 2008, the economy of the EU was in fact slightly larger when measured in current US dollars. Since the global financial crisis, however, a substantial gap has emerged. By 2024, US GDP had reached about $29.2 trillion (or around 27.5% of global GDP), while the euro area stood at about $16.4 trillion (14.7%) and the UK at $4 trillion. US outperformance is not an illusion – and has gathered pace this decade since the Covid pandemic.

What’s happening in Europe?

The boss of ABB, one of Europe's biggest engineering groups, with headquarters in Switzerland and a market capitalisation of around $200 billion, this week warned that Europe is heading towards a “mass unemployment” crisis unless politicians take urgent action aimed at boosting competitiveness. CEO Morten Wierod attacked policymakers in Brussels and national capitals for their lack of urgency in implementing the reforms recommended by Mario Draghi almost two years ago. Draghi's landmark report on European productivity and competitiveness highlighted the widening gap with the US economy. But only 10% of his 383 proposals have so far been acted upon. Other business leaders have made similar pleas in recent months.

Where does the US economy stand now?

America's outperformance began decades ago, and in the 2020s it has become “vast” and sustained, says The Economist. Recent IMF forecasts show US growth continuing to outstrip other big Western economies to 2030 and beyond. That's despite strong headwinds. Under Donald Trump, the US has become less attractive to high-skilled migrants who boost its dynamism; more vulnerable to a bond-market crisis as its debts mount and more tolerant of corruption. The Economist suggests that overall the self-harming “MAGA tax” – high tariffs, zero net migration and all-encompassing uncertainty over policy – shaved around three-quarters of a percentage point off the rise in GDP in 2025. It was closer to 2% than 3% – yet still far higher than the EU or UK.

What did the US do right?

The explanation lies in a range of natural advantages and long-run trends. The US has both continental scale and one single market and language, vast natural resources and the fiscal space that comes from issuing the world's reserve currency. While Europe's fragmented federalism holds it back, America's system means that businesses faced with unfriendly policies in one state can up sticks for another far more easily. America's shale revolution and liquefied natural-gas exports have reshaped global energy markets and driven US outperformance. Meanwhile, Europe has been hit harder by successive shocks – the financial crisis, the pandemic, the energy crisis. It struggles with its incomplete single market and remains fragmented by multiple languages, competing national interests, and different tax and legal systems.

Comparing the US and European economies

Underpinning the EU-European divergence is the growing difference between the two economies in terms of their industrial composition. The booming US technology sector has no European equivalent, and the gap is likely to widen in the age of AI. By contrast, Europe is strong in industries that have increasingly faced tough Chinese competition. The US has benefited from higher productivity, more business-friendly policies and deeper capital markets.

Is Europe really so far behind?

Economists have debated for years whether the US lead is unduly flattered by the ways in which it is measured. For example, in the mid-2000s, the US dollar was dramatically overvalued against the euro and has since fallen back, meaning that when measured in constant current dollars, the divergence appears greater than it “really” is. Others point to America's growing population and the fact that it's getting younger compared with Europe. The latest iteration of these debates is a friendly but pointed exchange of blogs and papers in recent weeks between US Nobel laureate Paul Krugman and three European economists, including the French 2025 Nobel laureate Philippe Aghion and the LSE's Luis Garciano. Krugman, drawing on recent analysis and charts by Seth Ackerman, argues that using headline GDP figures to measure the divergence is misleading and that Europe is doing better than most economists think.

Why is Europe struggling?

Broadly, Krugman's point is that when measured using GDP at purchasing power parity (PPP) – that is, correcting for domestic inflation and relative price differences – the two blocs are pretty much where they were 20 years ago (and Europe has pulled ahead when it comes to all kinds of social indicators, including life expectancy). Yes, the US dominates in rapid technological progress, but this progress is passed on to everyone in the form of lower prices and doesn't just raise US GDP. The three European economists counter that Krugman is being far too kind to Europe – and therefore unhelpful, by diminishing the need for radical reform. PPP is useful for comparing purchasing power across countries at a specific point in time, but a sequence of current-PPP comparisons does not make a credible measure of real growth.

Can Europe catch up?

The US lead in technology and innovation is “not helping America and Europe in the same way: it has led to higher US wages and profits, and the gap is widening each year”, say Aghion and his colleagues on Project Syndicate. It should not be controversial, they say, to agree that Europe is falling behind, and to obscure this reality means failing to address the causes. In short, Europe might not be so far behind as some think. But nor will it catch up unless it tackles its economic failings.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Donald Trump’s net worth has skyrocketed since he was elected president for the second time during the 2024 US elections.

According to TheStreet, Trump is the richest US president of all time (after previous presidents’ wealth is adjusted for inflation), and the only billionaire to live in the White House.

So, how rich is he? Forbes estimates that Donald Trump’s net worth currently stands at around $7.3 billion.

Though still far from matching the wealth of billionaire Elon Musk, the US president’s fortune cements his status among the richest people in the world.

We take a deeper dive into what Trump owns and how much it's worth.

What makes up the majority of Donald Trump's net worth?

By far, the lion's share of Trump's net worth comes from cryptocurrency and liquid assets, according to Forbes. Trump is flush with cash thanks to his cryptocurrency sales, which have added around $2 billion to his wealth in the past ten months.

Second to stablecoins and memecoins, Trump’s social-media venture has made him billions. Trump Media & Technology Group Corp (NASDAQ: DJT), the parent company of his social network, Truth Social, generated sales of just $3.6 million last year, but due to noise around Trump on a daily basis, shares in his company remain highly priced, leaving him with billions. The media company went public via a merger with the special purpose acquisition company (SPAC) Digital World Acquisition Company in March 2024.

Trump's booming real estate empire

A chunk of Trump's net worth also comes from real estate. Forbes estimates this to be worth $1.2 billion.

This includes his 30% stake in 1290 Avenue of the Americas in New York and 555 California Street in San Francisco, both valued at $1.4 billion and $1.6 billion, respectively.

Among Trump's other properties are Trump Tower ($215 million) in New York, 17 condos in Trump Park Avenue in New York ($94 million), Trump Winery ($44 million) in Virginia, and four homes in Florida, which are worth around $92 million.

He also owns an 11,000-square-foot Trump Tower penthouse in New York, several residential lots in California worth $50 million, and Seven Springs — a $30 million private estate in Bedford, New York.

Trump’s golf clubs and resorts are valued at $1.3 billion. The operating profits at his ten golf courses in six different states boomed from $19 million in 2020 to $66 million in 2024. He also owns three European golf properties – one in Ireland, two in Scotland – both valued at $118 million. The Trump Organization declared losses of over $100 million at these resorts, but business seems to have picked up in recent months, according to Forbes.

He owns several resorts, including the private club Mar-a-Lago in Palm Beach worth $490 million, and the Trump National Doral Miami, worth $390 million.

According to Time, Trump also received £3 million in income from Bibles sold on musician Lee Greenwood’s website. Greenwood is a close ally of Trump. The president also brought in $2.8 million from Trump watches and $2.5 million from Trump sneakers and fragrances.

Other assets held by Trump include $11 million for a helicopter and aeroplane, $5 million in loans made to his children, and a licensing and management business worth $501 million. Trump’s pensions are worth $2 million.

How much have Trump's legal problems cost?

What lies in the debit column, detracting from Trump's net worth? Forbes estimated his legal liabilities at $95 million. This comes after a New York appeals court threw out a $500 million civil fraud penalty case against Trump, bringing down how much he needed to shell out. The judges stated that while Trump was liable for fraud, paying nearly half a billion dollars was excessive and couldn’t be justified.

How Donald Trump's net worth has fluctuated over time

Forbes estimated Donald Trump's net worth to be around $200 million back in 1982, rising to $1.7 billion by 1989. However, his net worth plunged in the 1990s, and he fell off the Forbes 400 list for the first half of the decade.

In 1996, he was worth about $450 million. From there, Trump's net worth gradually rose over time, and by 2007 it was $3 billion before tumbling again in 2009, at the end of the Great Recession (December 2007 to June 2009).

In 2009, Trump began building his billions again, reaching $4.5 billion in 2015. Trump's net worth began to decline again in 2016, falling to $3.7 billion before bottoming out during the pandemic at $2.5 billion in 2020 and 2021, likely in part because of closures that shuttered his clubs and resorts.

In 2022, Trump's net worth was $3.2 billion but dropped again, to $2.6 billion, in 2023. In early 2024, he grew his wealth to over $6 billion after Trump Media went public, per the Bloomberg Billionaires Index.

In 2025, a report by State Democracy Defenders Action estimated that his crypto holdings, namely $TRUMP and $MELANIA meme coins and a stake in World Liberty Financial (a Decentralised finance, or DeFi, tied to his family) were nearly 40% of his net worth – approximately $2.9 billion.

After Trump returned to office, his net worth jumped to $7.3 billion, up from $3.9 billion in 2024.

The Spring bank holiday falls on the coming Monday, meaning the UK stock market will be closed on Monday, 25 May.

Typically, the UK stock market opening times are 8am to 4.30pm Monday to Friday, with a small break between 12pm and 12.02pm.

We look at the trading calendar below.

Is the stock market open on Spring bank holiday?

No. The London Stock Exchange (LSE) will be closed on the Spring bank holiday, which falls on Monday, 25 May 2026.

This is one of the eight standard holidays the stock exchange observes throughout the year, including Easter, Christmas and New Year.

The London Stock Exchange only observes English and Welsh holidays – not Scottish or Northern Irish. For instance, St Andrew’s Day on 30 November is a trading day for the markets, despite it being a bank holiday in Scotland.

If you want to know the key money dates for 2026, we cover those in a separate guide.

UK stock market holidays 2026

We’ve rounded up all the upcoming UK stock market holidays in 2026 and how they will impact trading on those days.

Source: London Stock Exchange

When is the US stock market closed in 2026?

If you invest in the US, you may want to know the New York Stock Exchange (NYSE) and Nasdaq’s open times and upcoming holidays this year.

Both stock exchanges’ standard opening hours are Monday to Friday 9:30am to 4pm Eastern Standard Time (EST) time, which is 2:30pm to 9pm BST in the UK.

The US stock markets will also be closed on Monday, 25 May, as it’s Memorial Day, which is a federal holiday.

One of the most often-repeated investing mantras says ‘sell in May and go away, don’t come back until St Leger Day’, referring to a well-known British horse racing day which takes place in September.

The saying is thought to date back to a 1950s edition of Stock Trader's Almanac. In those days, financial professionals would typically spend most of the summer on holiday. The issue wasn’t so much that stocks would fall over the summer, but that they wouldn’t do a whole lot at all.

“The rationale is simply that, back in the mists of time, the main market participants (think bowler hats and coffee shops in London) were all away on their summer holidays and socials,” said Ben Seager-Scott, CIO at advisory firm Forvis Mazars. “There simply wasn’t much of a market and everything, at best, drifted until everyone came back after the summer.”

But does this stock market saying hold any value for your investments today?

The short answer appears to be no.

“There is scant evidence that it was true historically and I think there’s even less of a case now, with constant 24-hour news cycles, much wider market participation and ubiquitous mobile communication technology,” said Seager-Scott.

Did ‘sell in May’ work in 2025?

While the adage often fails to deliver, it rarely performs as badly as it did last year.

Major indices enjoyed encouraging returns between May and September, largely reflecting an uptick in investor sentiment following the chaotic fallout from Trump’s Liberation Day tariffs, announced on 2 April.

“Last year was a great example of when [selling in May] would not have worked out in your favour,” said Adrian Murphy, CEO of wealth manager Murphy Wealth. “Had you done so, you would have missed out on a good deal of the recovery from the tariff shocks in April – the S&P 500 rose more than 18% and the FTSE 100 gained more than 9% from May to mid-September

And the geopolitical tensions plaguing the market this year could be just as much of a reason to avoid selling in May in 2026 as they were last year.

“With the conflict in the Middle East, markets are volatile,” said Murphy. “No one knows how the situation will pan out in the short term, let alone the next few months and beyond.

“You are as likely to crystallise any losses and be forced to reinvest at a higher price at the end of the summer, as you are to make gains by buying back in again when the market looks cheaper,” Murphy added.

However, there is some evidence that trading volumes are lower over the summer and during the Christmas period. That can increase market volatility, because fewer buyers and sellers can necessitate larger jumps between prices in order to buy or sell a stock.

“But this is very much two-way,” said Seager-Scott. That extra volatility can push prices up or down, depending on sentiment.

“That may partly explain the Santa rally effect,” Seager-Scott said, adding that there is little evidence that this is a seasonal pattern and rather a label that is applied in hindsight whenever markets happen to rise in December.

Do stock markets tend to underperform over the summer?

It’s questionable whether or not there’s any empirical evidence to support selling your shares in May. Various studies have looked into the results, and between them they paint a fairly blurred picture.

Fidelity International, for example, found that selling stocks in May generated positive returns in just 14 of the last 38 years. Investopedia investigated the trend going back to the 1930s and while it found that summers have generally yielded higher returns than winter since the 1950s, the opposite was true for the two decades before then.

Analysis from investing platform IG has found that years when Trump is in office have completely subverted the traditional ‘sell in May’ mantra.

The analysis found that the S&P 500 has returned 9.5% between May and October during Trump years, vs 1.3% during non-Trump years over the past two decades. That said, Trump years have also seen better-than-average performance for the index across the full year, with average annual gains of 14.6% in Trump years compared to 6.8% in non-Trump years.

“While Trump-specific trading patterns have already emerged, most notably the TACO [‘Trump Always Chickens Out’] trade of buying the dip before Trump’s key trade and foreign policy deadlines, investors in US equities should also be reconsidering their summer trading habits,” said Chris Beauchamp, chief market analyst UK at IG. “We may yet see a ‘Summer of Trump’ trend emerge as investors cotton on.”

The FTSE 100, though, tends to fare worse between May and October when Trump is in power compared to years when he isn’t. The index fell 2% on average over the summer months in years when Trump was in power, compared to gaining 0.6% in non-Trump years over the last 20.

On the face of it, that might seem to suggest that if you are invested in UK stocks it could make sense to sell in May, at least when Trump is in power, but on the whole most investment experts don’t think this is a good idea.

“In terms of good investment practice, given that markets tend to rise over time and, importantly, dividend income also accrues through the year, I’m not convinced opting to be sat in cash half the time makes much sense to me,” said Seager-Scott.

On that basis, time in the market, rather than timing the market, seems to be the more reliable (and easier) strategy.

The net worth of the richest person in the world is double that of the billionaire with the second-largest fortune.

While the wealthiest people in the world often change places on the rich list, the one person who has consistently held the top spot since 2025 is Tesla CEO and SpaceX founder Elon Musk – except for one time when he briefly dropped to second place, behind Oracle’s Larry Ellison last year.

In total, the five richest people in the world have a combined net worth of close to $2 trillion, according to Bloomberg’s Billionaire Index. Using the same index, we explore their wealth in detail below.

As the wealthiest bunch are all men, we take a look at the richest woman in the world in a separate guide.

The richest person in the world

1. Elon Musk  

Elon Musk is the richest person in the world, with a staggering $733 billion to his name.

The South African entrepreneur has added over a hundred billion to his net worth in the past year, thanks to buzz around the upcoming SpaceX initial public offering (IPO), touted to be the largest IPO in history. It has made him richer than the two billionaires right below him on the rich list combined.

Moreover, Tesla stock has surged nearly 14-fold since the pandemic, with a market capitalisation of $1.36 trillion at the time of writing.

Musk owns around 11% of Tesla and roughly 50% of SpaceX. We break down Elon Musk’s net worth in a separate guide.

2. Larry Page

Alphabet co-founder Larry Page’s net worth has topped $300 billion for the first time in history, as Google’s parent company’s stock rose in the latest Mag 7 earnings season after increased AI spending. His net worth now stands at $328 billion.

A majority of Page’s wealth comes from his stake in Google, which rebranded as Alphabet in 2015, grouping all its divisions – including Gmail, Android and YouTube – under one umbrella. He’s not the only mind behind Google in the rich list – as you’ll see below.

Find out more about Larry Page's net worth.

3. Sergey Brin

Sergey Brin, co-founder of Alphabet, is a new entrant to this list. He has a net worth of $305 billion, not far behind that of fellow co-founder Larry Page.

The American businessman was the president of Alphabet until 2019, and has since remained a board member and a controlling shareholder. He co-founded Google with Larry Page in 1998, after the two met at Stanford University.

Alphabet became the fourth company to achieve a market capitalisation of $4 trillion, joining the likes of Nvidia, Microsoft and Apple to hit the milestone. Its stock grew by 65% last year, marking the largest single-year jump for the company since 2009.

Brin has been donating millions of dollars of his shares in Alphabet to fund research on Parkinson’s disease.

4. Jeff Bezos

Jeff Bezos has a net worth of $284 billion. The billionaire is most famous for founding Amazon in 1994, which started when Bezos saw a gap in the market for e-commerce and began to sell books online, working out of his garage. Now, the empire has a market capitalisation of $2.85 trillion.

Bezos also owns The Washington Post, one of the largest newspapers in the United States. He also has a stake in Blue Origin, a space exploration company he founded in 2000.

Bezos is increasingly looking to dominate the world of film and fashion. He was the lead sponsor and honorary co-chair of the 2026 Met Gala and donated $10 million, making it the largest individual financial commitment in the event’s history.

Moreover, last year, Amazon took creative control of the James Bond franchise. Back in 2021, it acquired MGM Studios, a historic American production company, for $8.45 billion. Some of MGM’s most popular films include The Wizard of Oz, Gone with the Wind and 2001: A Space Odyssey.

Find out more about the factors that contributed to Jeff Bezos’ net worth.

5.  Larry Ellison

Larry Ellison is the man behind one of the world’s largest software companies, Oracle, which he founded in 1977. His net worth is $248 billion.

Ellison owns more than 40% of Oracle – making him the largest shareholder – and has holdings in Tesla, having been one of the company’s board of directors from 2018 to 2022.

On 10 September 2025, Ellison briefly overtook Elon Musk as the richest person in the world, a title Musk had claimed for just over 300 days. This was due to Oracle’s earnings report, which revealed a deal with OpenAI.

It resulted in gains of 36% in a single day for the database software company’s share price, adding almost $250 billion to its market capitalisation and around $89 billion to Ellison’s personal wealth. Major Oracle shareholders also became wealthier instantly.

Read more on Larry Ellison’s net worth and how he makes the rest of his billions away from Oracle.

If you’ve been keeping a close eye on share tips 2026, then don’t miss this weekly round-up of the top stocks to consider for your portfolio.

The MoneyWeek share tips 2026 guide pulls together some of the most popular stocks from top share tipsters around.

As well as the UK financial pages, we look at publications across the pond for investors who want to diversify their holdings internationally.

Investors will undoubtedly want to refresh their finances this year – we look at dividend heroes, what's happening with gold prices and the best way to invest. If you're new to investing, here's how to start.

This list is updated weekly.

Share tips 2026: top stock picks of the week

Stocks to buy

1. Tapestry (NYSE: TPR)
Barron's
Tapestry's luxury leather-goods brand, Coach, is popular with younger consumers as it is more affordable than European ultra-luxury brands. The US group has upgraded its annual sales-growth guidance and its gross margin has improved, even with marketing and investments in new products. Despite economic challenges facing younger consumers and concerns over Tapestry's other brand, Kate Spade, analysts expect double-digit earnings growth amid global expansion. $145

2. CMC Markets (LSE: CMCX)
Investors' Chronicle
CMC Markets' full-year pre-tax profit of £101 million fell short of expectations owing to high operating and legal costs. But this financial year, CMC expects net operating income to total £460 million-£480 million, a 17%-22% increase from last year. This is due to the company's shift from being tied to volatile trading patterns to establishing itself as a “financial-architecture specialist for corporate clients”, making income more stable. This led to a 33% increase in net investing revenue, while the core trading division continued to grow. 462p

3. Mitie (LSE: MTO)
Investors’ Chronicle
Mitie's full-year revenue increased 10.5% thanks to organic growth and acquisitions. Adjusted operating profits rose 13% to £264 million, while the underlying margin improved despite rising national insurance costs. Free cash flow exceeded expectations, and new business wins boosted orders to a record £16.3 billion. Earnings per share are expected to increase from 14.4p to 16.4p by fiscal 2028. Despite the stock's valuation being broadly in line with its peers, the group has delivered “earnings surprises” over the past decade. 163p

Stock to sell

1. Ulta Beauty (NASDAQ: ULTA)
Barron's
Ulta Beauty's stock has more than doubled since the pandemic, but it is now down over 30% from its highs of February 2026. The US cosmetics retailer reported higher first-quarter sales, higher average purchases and prices, and an uptick in the number of members in its loyalty programme. But investors are concerned about the sustainability of earnings growth and margins in addition to the need for heavy investment to maintain market share amid fierce competition. Influencers promoting products on social media makes it difficult for bricks-and-mortar players to keep up. While Ulta's TikTok Shop is attracting new, younger customers, other consumers have to contend with high inflation. Avoid. 467p

Stocks to hold

1. Quanta Services (NYSE: PWR)
Barron's
America's Quanta Services, a provider of key infrastructure for electric utilities and pipelines, has benefited from the surge in demand for AI, with the shares up 50% since October 2025. Major technology firms are set to invest trillions in AI, leading to increased demand for electricity and data centres, which will need power plants to keep running; this helps explain Quanta's record $48.5 billion order backlog. Quanta is the partner of choice for many utilities owing to its equipment and large labour force, and it could benefit from the potential expansion of ultra-high-voltage transmission lines. Buy ($707).

2. VP (LSE: VP)
Investors' Chronicle
VP swung to a pre-tax loss due to a soft construction market and lower revenues. However, the equipment-hire company maintained the dividend, and leverage remained below target. Adjusted profit declined 26% to £27 million, in line with guidance. VP's restructuring of the Brandon Hire business, which included cutting branches and jobs, resulted in a £25 million charge, but should bolster margins. VP expects trading for the new fiscal year to meet expectations, with sales of £352 million and adjusted profit of £33 million. Analysts expect double-digit earnings-per-share growth. Buy (465p).

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Elon Musk is now not only the richest person in the world but also the first and only trillionaire in history.

After SpaceX’s highly anticipated IPO on 12 June, Forbes reported that Musk added $188 billion to his already astronomical wealth. It means that his net worth is now more than that of the four billionaires after him on the Forbes Real Time Billionaires List.

But where exactly did it all start, and how did the South African tycoon add 12 zeroes to his net worth?

We chart how his wealth has grown from his early years of founding what is now PayPal, joining Tesla, and launching SpaceX.

Elon Musk’s net worth over the years

At the time of writing, Elon Musk’s net worth is $1.3 trillion, according to Forbes.

To put that into perspective, Sarah Coles of AJ Bell says: “If you aimed for a trillion pounds and you were starting from scratch, you could put away £500 a month and, with growth at 5% a year and contributions rising 2% a year, it would take around 316 years.”

Musk’s net worth has grown substantially over the past few years, driven largely by his stakes in electric vehicle company Tesla and aerospace firm SpaceX.

He first appeared on Forbes’s World’s Billionaires list in 2012, when he had an estimated fortune of $2 billion, making him the world’s 634th richest person. From then on, it took Musk less than a decade to take the top spot, dethroning Amazon CEO Jeff Bezos as the world’s richest person in January 2021.

Elon Musk’s early life and career

Musk was born in South Africa on 28 June 1971. From an early age, he showed an interest in technology and innovation.

His first major success came with Zip2, a company that provided online business directories and maps to newsletters. In 1999, Compaq acquired Zip2 for nearly $300 million, paving the way for Musk into the tech industry.

Musk used proceeds from the sale to launch X.com, an online payment platform that eventually evolved into PayPal. In 2002, eBay acquired PayPal for $1.5 billion. That same year, Musk used $100 million of his own fortune to start SpaceX, aiming to make space exploration more accessible and colonise Mars.

In 2004, Musk joined Tesla Motors and became the company’s CEO four years later. Under his leadership, Tesla emerged as one of the world’s most electric vehicle companies, with a market capitalisation of over $1.12 trillion.

Musk also co-founded solar panel installation firm SolarCity, neurotechnology company Neuralink and tunnel construction firm The Boring Company.

How SpaceX became the largest IPO in history

SpaceX’s meteoric rise to become the world’s largest-ever initial public offering can be attributed to Elon Musk’s larger-than-life public persona, widening interest in investing in space, and rising AI spending by tech megacaps.

On 12 June, shares in the AI and space company began trading on the Nasdaq at $150 per share, raising $75 billion and closing with a market cap of $2.11 trillion.

It makes SpaceX one of the world’s most valuable companies, reaching the milestone in an extremely short timespan.

Elon Musk’s role in the Trump administration

Elon Musk’s influence extends far beyond the tech world. He was a prominent supporter of Donald Trump during the 2024 US presidential election, spending over $290 million to get Trump into the White House, according to CNN.

Following Trump’s victory over Democratic nominee Kamala Harris, Musk secured a position in his administration, serving as the leader of the Department of Government Efficiency (DOGE).

DOGE emerged as a means to cut US government spending, which resulted in mass workforce layoffs and controversial cuts to USAID, which is responsible for foreign aid and humanitarian relief. On 28 May 2025, Musk departed from the role to focus on Tesla.

Elon Musk’s property portfolio and car collection

Musk has built up a vast property empire over the years. In 2020, he stated on X that he would sell all his “physical possessions” and “own no house”. At that time, the asking prices for his seven homes were more than $100 million in total, according to Architectural Digest, including a 16,000-square-foot home in Los Angeles, which sold for $29 million.

After shedding his property portfolio, Musk moved into a tiny home in Boca Chica, Texas, close to the SpaceX headquarters. In 2022, he bought a 6,900-square-foot mansion in West Lake Hills, Texas, worth $6 million.

The billionaire has also built his own company town called Starbase, named after his rocket launch site, on the southern tip of Texas. The city covers around 1.6 square miles and is home to some 500 people, according to The Guardian.

The Tesla CEO has a large collection of cars, ranging from a Ford Model T, a 1997 McLaren F1, a Tesla Roadster and the 1976 Lotus Espirit that James Bond drove in the 1977 film The Spy Who Loved Me. Musk bought it at an auction in 2013 for nearly $1 million, according to the BBC. He also owns private jets, each worth millions of dollars.

How does Elon Musk manage his wealth?

With so many billions to his name, it’s not surprising that Elon Musk has a wealth manager. His fortunes are handled by Excession LLC, a single-family office formed in 2016. It’s run by James Birchall, Musk’s trusted advisor and CEO of Neuralink.

While Musk doesn’t donate his wealth as generously as other billionaires like Bill Gates, Jeff Bezos and Mark Zuckerberg, he still gives away billions in shares to charities. He has an organisation called the Musk Foundation, with more than $14 billion in assets. However, The New York Times reported that the charity failed to give away the minimum amount required by law for the fourth year in a row.

The Dow Jones Industrial Average is one of the world's most watched and most cited stock indices, containing America's 30 biggest companies. For many people, it is the stock market.

And it began life on this day in 1896 when Charles Dow, who had published his Transportation Average some 12 years earlier, published his index of 12 industrial stocks, which included the National Lead Company, the Tennessee Coal, Iron and Railroad Company, and the United States Rubber Company. The index expanded to contain 20 stocks in 1916, and 30 in 1928.

The index was originally calculated as a simple arithmetic average, the sum of the stock prices of the 12 companies divided by the number of companies in the index. Now, the prices of all the stocks are added, and the sum is divided by the “Dow Divisor”.

It's by no means a perfect index. Among the main complaints are that, with just 30 companies, it is not representative of either the US stock market or the US economy. Plus, it is a price-weighted index, so more expensive stocks have a greater influence, but it takes no account of market capitalisation. It is also a simple price return average, and does not take into account dividends.

But no matter what its flaws, there's no denying that it's done rather well since it was invented. If you'd invested $100 on the first day of publication, you'd now be sitting on something like $4.5 million. And if you'd reinvested your dividends, you'd have the mind-boggling sum of $859,580,000. There's a valuable lesson there somewhere.