Switzerland hasn’t been shielded from these developments. The start of the year was marked by the tragic disaster in Crans-Montana. On New Year’s Eve, a fire broke out in a bar popular with young people, resulting in numerous deaths and serious injuries. While Switzerland was still reeling from this tragedy, new shocks were already emerging on the global stage.
In the first week of January, the US launched a military intervention in Venezuela and arrested its leader, Maduro. At the same time, Trump has made it clear that this needn’t be an isolated case. He also called Colombia “sick” and Cuba remains a target of his hostility. The message is clear: the US government is willing to use military force to advance its interests if necessary.
The growing pressure on Greenland also fits into this picture. A territory of Denmark, the island was once again targeted by the US President. Trump openly declared that he would bring Greenland under US control, if necessary, using military force. He threatened punitive tariffs on the eight EU states that backed Denmark: 10 percent from February, rising to 25 percent by the summer if they didn’t agree to a full sale of Greenland to the US.
These developments are no coincidence. They align with America’s new security strategy adopted in November, which focuses explicitly on dominance in the Western hemisphere. In foreign policy, the US government is increasingly relying on confrontation and the law of the jungle.
This hardline approach isn’t just limited to foreign policy. Domestically, too, pressure is mounting on institutions that do not bow to the government’s agenda. The most recent example is US Federal Reserve Chair Jerome Powell, who is under investigation for allegedly making false statements in connection with the renovation of the Fed’s headquarters. Powell has been in the president’s sights for some time because he opposes a significantly greater loosening of monetary policy.
With Trump’s push for monetary easing, the independence of a central institution is coming under pressure. But history clearly shows how important independent central banks are for stable prices. Previous examples, such as Türkiye, illustrate the risks of politicized monetary policy. At the same time, social tensions are increasing, as shown by the recent unrest in Minneapolis in connection with the fatal incident involving ICE, the immigration enforcement agency. It’s clear, then, that the US is facing challenging times, both politically and socially.
In such a situation, it’s hard to see these conditions being favourable for the American economy. Accordingly, our assessment of the US remains rather critical, reflected in a slightly underweighted equity allocation overall. We also continue to anticipate a weaker US dollar. This opens up opportunities for emerging market equities in particular, which we’re continuing to overweight. And relative to the very tech-heavy US equity market, we see opportunities in globally focused high-quality companies, strengthening the geographical and sectoral diversification of our portfolios. We’re holding firm on gold – both as protection from these and other crises, and because there’s a strong structural argument that the precious metal will appreciate further. Against this backdrop, robust diversification remains key.
