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Trump and a trail of broken promises
On the stump in 2024, Donald Trump promised voters that he would cut the cost of living. Instead, US inflation is accelerating. He focused particularly on fuel prices. In November 2024, at the time of the election, the pump price for regular unleaded gasoline averaged $3.10 per gallon. He said he would drive it to below $2 a gallon; today it retails at $4.33, more than double where he promised it would be. Diesel is considerably more expensive at $6.50.
He promised America would be involved in no more wars. He started one with Iran that he now finds very difficult to bring to a stop, let alone to win. He ignored or failed to understand one of the cardinal maxims of warfare: “no military plan remains intact after first contact with the enemy”. The failure to bring this conflict to a conclusion is a strong contributory factor behind the big spike in energy costs.
“I have the power”, he boasted before the election, “to be able to bring the war between Russia and Ukraine to a peaceful end. I can do it in a day”. From their own very different perspectives, the protagonists disagree. Two years on, the drones are still flying, the ballistic missiles hurtle down from the sky, the casualties mount and the misery endures. At the centre of both sides’ strategy is the destruction of energy assets. He announced a cessation of attacks on such installations. He was ignored.
From clean sweep to clean swept away?
The mid-term elections are now only two and a half weeks away. Fuel prices and war are killing Trump in the polls: the latest CNN poll-of-polls says that at 65% he has the greatest disapproval rating in his second term, and at 34%, the lowest approval rating.1 The bookies’ odds are looking terrible for the Republicans: Polymarket gives the Democrats a 90.5% chance of winning the House (every seat is being contested) and, crucially, 63.5% chance of regaining the Senate where a third of seats are up for grabs.2
Pollster Kalashi puts a Trump impeachment at 66.5%3, though only a 17.5% likelihood of him being removed from office. The bar for removal is high, requiring a two-thirds majority in the Senate after a trial, in turn dependant on an impeachment petition secured by a simple majority in the House of Representatives. Unless there is clear evidence of specific criminality or bringing the office of the President into disrepute, trials inevitably become a battle of political wills. The Democrats failed twice in his first term; if impeached this time, much will depend on the preparedness of disillusioned Republican senators to ditch their man as a liability with all the consequences involved. This is not at all the legacy Trump had in mind.
Bad polls, worse reactions
The Donald is frustrated and furious. His inability to control events is driving him round the bend. He’s like a bear with acute toothache and behaving as badly. It is when he is in such a position that the man who habitually enjoys throwing his weight around and having his way becomes a menace. Except where Vladimir Putin is concerned.
The case in point is Trump’s decision not only to lift sanctions against Russian diesel exports, but for the US to buy 300,000 tonnes of diesel (approx. $495 million) direct from Russia in the hope it produces a significant drop in domestic consumer prices. As one energy expert said, “it won’t even touch the sides”. However, even if not much in terms of financial consideration, Putin will happily take every cent that boosts his war effort and military spending.
To constrain Ukraine’s ability to attack Russian refining capacity, Trump has disrupted Ukraine’s access to Starshield, the military version of Elon Musk’s SpaceX Starlink satellite system; Starshield is fundamental to Ukrainian military command and control systems. The disruption significantly impedes Ukraine’s ability to make offensive strikes but also renders it almost defenceless against Russian attacks. Trump also demands that Zelensky must be removed as head of state. All of this couched in terms of actions needing to be taken “in America’s interest”.
Immoral behaviour and a breach of trust
This is where Trump becomes dangerous, putting his own political interests before his legal and moral obligations. What he wilfully ignores is the 1994 Budapest Memorandum. At the end of the Cold War, Ukraine had the second biggest nuclear arsenal on the planet thanks to the number of old Soviet static missile silos sunk into its territory. As part of the Strategic Arms Reduction Programme, Ukraine was prevailed upon to give up all its nuclear weapons. In return, in a four-way international agreement it was given explicit sovereignty and security assurances from Russia underwritten by the United Kingdom and the United States. In the event of Russian aggression, the UK and the US would look after Ukraine, assuring the integrity of its border and the populace that they would be safe. In the event of a nuclear attack on Ukraine, the signatories would have to go to the UN for a resolution defining a response in defence of Ukraine.
“Assurance” is a weasel word: the inference is a guarantee; the reality is very far short. It gives wiggle-room for those providing the security to get off the hook. Events proved the agreement to be as porous as a colander. The memorandum certainly does not expect the United States actively to take sides in favour of Russia and against Ukraine. Given Russia is both the aggressor and transgressor, and Ukraine is obviously the aggrieved party, Trump’s actions this week are not only immoral but a clear breach of trust. Zelensky is painfully aware of Ukraine’s reliance on US air defence systems, technology and intelligence all of which Trump uses shamelessly as leverage. It was therefore instructive that in an interview with Piers Morgan, Zelensky agreed publicly with the journalist that Ukraine had been “betrayed” by Trump.
Trump is not alone among White House occupants to have been careless of his obligations: Joe Biden was as irresponsible when in January 2022 amid growing signs that a Russian invasion was imminent, he said that a “limited incursion would be acceptable”. Neither president had signed the Memorandum (that was Bill Clinton). To a greater or lesser extent neither saw it as being binding upon them to uphold it. In 2014 when Putin illegally annexed the Crimea, President Obama and UK Prime Minister David Cameron huffed and puffed but otherwise sat back and let events unfold. The abrogation continues.
Middle Powers in a spin
Trump’s actions have widened the schism with Europe. He doesn’t give a damn. In the National Security Strategy of the United States of America document published in November last year (of which this author, Merlin Investment Director Alastair Irvine, conducted an extensive critique in an analysis entitled “Peace and Perversion” published by Jupiter in February 2026), Trump declared bluntly that any threat posed by Russia is not America’s concern, it is explicitly Europe’s problem to deal with.
European protests against Trump’s actions have been varied. Our new Prime Minister met again with President Zelensky with warm words of support and a £45m promise of more missiles (ones that our own armed forces are chronically short of), but in Parliament was careful not to criticise Trump instead saying his role is to “rebuild bridges”. In Rome, Trump’s political anima Georgia Meloni was far less equivocal making blunt criticisms.
Misplaced moral rectitude
EU leaders have been quick to deride Trump’s decision to purchase sanctioned Russian “blood” diesel. They have renewed support for Zelensky. But people in glass houses should beware throwing stones. According to campaign group Urgewald, in the nine months to the end of September, EU member states had purchased $7.9 billion of Russian Arctic Liquefied Natural Gas. That exceeds the value of the US diesel deal by almost a factor of 18. Brussels has admitted that since the conflict began, total EU purchases of Russian LNG have amounted to $209 billion. A complete ban on imported Russian gas is not due to be effective until 1 January 2027.
What happens to the diesel market beyond the US election is anybody’s guess. Will Trump continue to try and help US consumers out of a sense of duty? Or does he lose interest because electorally it no longer matters. Will he restore sanctions against Russia? Diesel is certainly a concern given the extent it literally powers the mechanics of the economy. But in Europe, and Germany especially, gas is every bit as important as diesel both in the industrial and consumer sectors. The European wholesale gas price at €83/MWh is three times higher than last January; we are yet to reach peak seasonal demand and Russian supplies will be fully embargoed from 1 January 2027.
Repricing risk
In that analysis of Trump’s National Security Strategy, I concluded that it was offensive in every sense and that as a statement of national intent it was brutally and chillingly simple and unequivocal. I also concluded that far from enhancing America’s security, Trump’s vanity, his contempt for the international rules-based order, his lack of judgement and his wilfully corrosive attitude towards America’s natural allies would divide and weaken the West, including America. Everything in the intervening eight months points towards that conclusion being correct.
Deficits and debt are big market preoccupations. So too is inflation. But the massive repricing of risk reflects the extent to which the instability of the geostrategic and geopolitical tectonic plates is altering investors’ perspectives. The US 10-Year Treasury bond is the recognised proxy for the global risk-free rate of return (i.e. the rate of interest that is demanded for what is judged to be a “riskless” investment). In 6 years the yield has risen from 0.5% to over 5.0%, its highest since the 1990s. Seldom has a decimal point been so significant.
The Jupiter Merlin Portfolios are long-term investments; they are certainly not immune from market volatility, but they are expected to be less volatile over time, commensurate with the risk tolerance of each. With liquidity uppermost in our mind, we seek to invest in funds run by experienced managers with a blend of styles but who share our core philosophy of trying to capture good performance in buoyant markets while minimising as far as possible the risk of losses in more challenging conditions.
Footnotes
1 CNN Poll of Polls: Trump approval rating | CNN Politics
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