Trump faces pushback from investors.

Our view on the markets and investment strategy in the May 2025 Market Compass.

Highlights Include

Liberation Day fallout

President Trump’s sweeping tariff announcement on April 2 sent shockwaves through global markets. But after a historic investor backlash—including a sharp selloff in US Treasuries—the administration was forced to delay the reciprocal tariff rollout by 90 days. US equity markets ended April relatively flat, but currency markets reacted harshly: the dollar fell 4.5% against the euro and 6.6% against the Swiss franc.

Growth projections cut, recession risks rise

The IMF downgraded its 2025 global growth forecast from 3.3% to 2.8%, with the US seeing the steepest cut. Q1 US GDP already contracted by -0.3%, and consumer sentiment has fallen to post-COVID lows. In our view, a moderate recession now appears increasingly likely.

Q1 earnings – solid but overlooked

Earnings season started strong in Europe and Switzerland, with Novartis and UBS posting robust results. However, muted market reactions suggest investor focus has shifted to macro risks. In the US, optimism around corporate earnings appears disconnected from economic reality.

Valuations out of sync with fundamentals

US equity markets continue to price in optimistic growth and earnings assumptions that we believe are unjustified. We reduced our equity exposure to underweight and now favor European equities over US peers.

Gold at record highs – time to lock in gains?

Gold surged to a new high of $3,289 (+5.3% in April, +23% YTD). Given the strength of the rally, we’ve tactically reduced our overweight position and would consider re-entering on pullbacks to the $3,100–3,000 range.

Macro matters more than ever

Historical data shows that recessions can double the depth and duration of market corrections. With leading indicators cooling—especially in manufacturing—we emphasize macro vigilance, quality assets, and portfolio resilience.

Ready to dive in? Download the full PDF of our May 2025 Market Compass

for a detailed analysis and forward-looking guidance on navigating today’s financial markets.

Do not hesitate to contact us with any questions about the topics discussed. We are happy to assist you with our expertise.