Trump’s first 100 days

The first 100 days in office are a milestone for any US president. On 30 April 2025, President Donald Trump achieved that milestone. But while hopes about the new administration initially buoyed markets, sentiment soon worsened due to its unconventional trade policy and the economic uncertainty this has caused. 

When Trump was sworn in for his second term as US president, on 20 January 2025, markets were optimistic. Hopes of tax cuts and deregulation lifted US equities. The S&P 500 hit all-time highs in mid-February as investors anticipated a pro-business administration.

The administration’s talk about trade tariffs weakened the market in March, though no specific measures were announced at that time. On Wednesday, 2 April, Trump’s “Liberation Day”, a raft of country-specific tariffs was announced. The tariffs shocked investors with their aggressiveness, causing equities to fall sharply. “The US effective tariff rate surged past levels reached during the Great Depression while counter-responses from major trading partners significantly pushed up the global rate,” later commented Professor Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research of the IMF¹.

On 9 April, investors were surprised a second time, when Trump announced a 90-day pause on tariffs for countries that had not retaliated. This caused a partial rebound in equities. Trump also announced substantial tariffs against China, which had retaliated, while a 10% tariff on most other countries remains in force.

S&P 500 return (rebased to 100) 

Mixed economic data

Despite turmoil in the financial markets, some recent US economic indicators remain resilient. US jobless claims (i.e., the number of Americans filing for unemployment benefits) for the week ending 19 April were up slightly (6,000) at 222,000, in line with expectations and seeming to indicate a robust US economy². US retail sales rose 1.4% in March, on a month-on-month basis, potentially due to consumers purchasing imported goods ahead of anticipated tariffs. Car sales were particularly strong³.

On the other hand, there are signs of weakness in sentiment. The University of Michigan’s Index of Consumer Sentiment fell to 52.2 in its final results for April, down from 57.0 in March, and the fourth consecutive month of falls. “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead. Labor market expectations remained bleak,” the survey stated⁴. Job cuts by the Department of Government Efficiency (DOGE) could weaken future labor data. These cuts have not yet appeared in official data, as they are being challenged in court by unions.

China’s manufacturing purchasing managers’ index fell to 49 in April, the lowest since December 2023.  Small businesses in the US that rely on Chinese manufacturing could be especially hard hit. The market, unlike economic data, is forward-looking. As of 28 April 2025, the S&P 500 was down about 9% since Trump’s inauguration. Although down, the index has likely fallen less than it would have if the full force of the tariffs announced on 2 April had taken effect.

Many market participants may expect that the tariffs will be watered down. This might happen through bilateral trade agreements, or if the US administration ultimately backs down. An early sign of this might be the easing on 29 April of the impact of tariffs on the car manufacturing industry, allowing companies with US factories to reduce the import taxes they pay on parts. The measure was intended to provide relief to businesses for two years as they rework their supply chains, the White House said. 

Uncertainty

There is a downside scenario in which the US does not back down and fails to make many trade deals. This could potentially trigger a global recession and further declines in markets. A possible crunch point might be around 8 July, 90 days from the date the suspension was announced (9 April). Might that prove to be a more significant milestone than the 100 days since inauguration?

There are other scenarios, too. There could be an end to US exceptionalism. The US, so long an engine of world growth, could slip towards recession while the rest of the world gradually reroutes its trading patterns, allowing modest growth. While several economists and investment banks have increased their forecast probabilities of a recession after the tariffs, perhaps the prevailing sentiment among commentators is currently one of uncertainty.

The tariffs, most economists believe, are unlikely to achieve the US administration’s aim of reversing the US trade deficit. Given their questionable effectiveness, there are concerns that Trump could perhaps resort to other unconventional measures to pressure countries with which the US runs deficits. After the administration’s policy reversal between 2 April and 9 April, anything is possible.

Markets and businesses need governments to be consistent. When planning investments, such as building a new factory or developing a new product, companies need to be able to make confident forecasts about supply chains and economic conditions. In early April, markets were whipsawed by the vagaries of US trade policy.

A loss of business confidence is evidenced by some recent survey data. Moody's Analytics Survey of Business Confidence, a weekly survey of global business confidence, fell to 7.8 in late April, compared with readings between 25 and 30 for most of Q4 and the start of 2025⁵.

On 29 April, General Motors postponed a conference call due to uncertainty over US tariffs and said its earnings guidance does not reflect their potential impact⁶. Port authorities in the US are reportedly expecting Chinese shipments to fall sharply. The chief executives of Walmart, Target and Home Depot, privately warned the administration that tariff plans could disrupt supply chains, according to reports⁷. United Parcel Service (UPS) said it will cut 20,000 jobs (about 4% of its total) this year, and close 73 facilities, as it prepares for a fall in delivery volume from its largest client, Amazon. “The world hasn't been faced with such enormous potential impacts to trade in more than 100 years,” UPS CEO Carol Tome said during the company's earnings call⁸.

Even if there is eventually a significant softening of tariffs, the erratic decision making of the US administration during its first 100 days could leave a permanent mark on business and consumer confidence. Restoring trust among allies and long-standing trading partners will be difficult. Markets could remain affected by uncertainty and volatility for the duration of this US administration.

Diversification

In uncertain times, investors should ensure that their portfolios are well-diversified. As Nobel laureate Harry Markowitz famously said, “Diversification is the only free lunch in investing”. Holding different kinds of assets can help reduce an investor’s exposure to any single risk. A diversified portfolio should have a wide spread of investments across various asset classes. In my view, this means investors should consider broadening their portfolios beyond long-only equities and long-only bonds. They should consider alternative asset classes, such as market neutral equity.

An equity market neutral approach seeks to avoid the directionality of markets. It does this by holding a long book and a short book in balance. It seeks to generate returns from alpha rather than beta. In a down market, the short book may make a positive contribution even if the long book is negative. Similarly, in an up market, the long book may make a positive contribution even if the short book is negative. When one book is positive and the other negative, the relative difference between them determines the strategy’s return. This means that returns can be uncorrelated with equity markets, providing the diversification that investors need.

Footnotes

¹ Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research of the IMF, Amid trade tensions and high policy uncertainty, the path forward will be determined by how challenges are confronted and opportunities embraced, April 22, 2025. Available at https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era

² Department of Labor, News Release, 24 April 2025. Available at https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20250630.pdf

³  United States Census Bureau, Advance Monthly Sales for Retail and Food Services, 16 April 2025. Available at https://www.census.gov/retail/sales.html

⁴  University of Michigan, Survey of Consumers, Final results for April 2025. Available at https://www.sca.isr.umich.edu/

⁵ Moody’s analytics, Moody's Analytics Survey of Business Confidence, 28 April 2025. Available at https://www.economy.com/economicview/indicator/usa_dsbc

⁶ General Motors, News Release, 29 April 2025. Available at https://investor.gm.com/news-releases/news-release-details/gm-releases-2025-first-quarter-results-and-reschedules

⁷ Marc Caputo, Ben Berkowitz, Axios, 23 April 2025. Trump softens tariff tone amid empty shelves warning, market slump. Available at https://www.axios.com/2025/04/23/trump-economy-tariffs-china-powell

⁸ Abhinav Parmar and Lisa Baertlein, Reuters, 29 April 2025, UPS to cut 20,000 jobs on reduced Amazon deliveries, as US tariffs weigh, Available at https://www.reuters.com/markets/us/ups-reports-fall-first-quarter-revenue-2025-04-29/

Jupiter Merian Global Equity Absolute Return Strategy risks 

• Share Class Hedging Risk - The share class hedging process can cause the value of investments to fall due to market movements, rebalancing considerations and, in extreme circumstances, default by the counterparty providing the hedging contract.
• Currency risk - the strategy is denominated in USD and may use hedging techniques to try to reduce the effects of changes in the exchange rate between the currency of the underlying investments and the base currency of the strategy. These techniques may not eliminate all currency risk. The value of your shares may rise and fall as a result of exchange rate movements. 
• Investment risk - whilst the strategy aims to deliver above zero performance irrespective of market conditions, there can be no guarantee this aim will be achieved. Furthermore the strategy may exceed its volatility limit. A capital loss of some or all of the amount invested may occur.
• Derivative risk - the strategy uses derivatives to generate returns and/or to reduce costs and the overall risk of the strategy. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.
• Company shares (i.e. equities) risk - the value of Company shares and similar investments may go down as well as up in response to the performance of individual companies and can be affected by daily stock market movements and general market conditions.
• Stock Connect risk - the strategy may invest in China A-Shares through the China-Hong Kong Stock Connect (“Stock Connect”). Stock Connect is governed by regulations which are untested and subject to change. Trading limitations and restrictions on foreign ownership may constrain the strategy's ability to pursue its investment strategy.
• Sustainability Article 8  - Investments are selected or excluded on both financial and non-financial criteria. The strategy's performance may differ from the broader market or other strategys that do not utilize ESG criteria when selecting investments.

For a more detailed explanation of risks, please refer to the "Risk Factors" section of the prospectus. 

Important information

This marketing document is intended for investment professionals* and is not for the use or benefit of other persons. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.

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