Markets were going well this week until about Thursday when things took a downward turn which continued on Friday. I don’t think these falls can entirely be credited to Mr Jamie Dimon, who leads America’s largest bank, JP Morgan as he told the BBC he was “far more worried than others” about a serious market correction, which he said could come in the next six months to two years but it wouldn’t have helped the market sentiment.
In a rare and wide-ranging interview, the bank boss also said that the US had become a “less reliable” partner on the world stage. He cautioned he was still “a little worried” about inflation in the US, but insisted he thought the Federal Reserve would remain independent, despite repeated attacks by the Trump administration on its chair Jerome Powell.
It is more likely to be down to a combination of the 11th day of the United States federal government shutdown, and the effects of the administration’s paralysis have begun to be felt across the country. Le Monde [Ed – que?] reports that with no end to the crisis in sight, many Americans expect to see the direct economic impacts of the political impasse in the days to come. The shutdown was caused by a deadlock in the US Senate between Republicans and Democrats over budget issues.
And also, down to President Donald Trump having become frustrated with China’s President Xi Jinping and has said he would impose an additional 100% tariff on imports from China from next month as reported on BBC News. In a post on social media, Trump said the US would also put export controls on critical software.
In an earlier post on Friday, he hit back at Beijing’s move this week to tighten its rules for exports of rare earths, accusing China of “becoming very hostile” and trying to hold the world “captive”. He threatened to pull out of a meeting with China’s President. He later said he had not cancelled it, but that he did not know “that we’re going to have it”.
Even cynical me does not think this is a backlash to not having won the Nobel Peace Prize this week, as even Mr Trump would not expect the end of an un-endable war to be officially declared before being agree by the parties involved, surely! Although if, as I am sure the world hopes, the ceasefire in Gaza holds, a wager on next year’s winner might well make up for this week’s market losses! [Ed – please point out that this does not constitute financial advice!!]
The current bull run in markets is three years old and from what I tell it does feel like we are about to enter the end of cycle volatility. It’s a time to hold your nerve as there are often some good investment profits to be had during this period in the economic phase. But to talk sensibly about this I’ll hand over to the experts in the following section:
Market News
As we are now into Autumn, staying informed about market trends and economic forecasts is crucial. With that in mind can share the Tatton Autumn Outlook 2025 which provides a concise overview to put current market conditions into context and provides:
- A full Market Overview – an analysis of capital markets and expected trends for the upcoming season
- Asset review – bonds, equities
- Regional Focus – detailed outlooks for the US, UK, Europe, and Emerging Markets
I can also include the usual Tatton Weekly covering the following topics:
- Volatility on the horizon – Without fact, markets feed on rumour, and a lack of US economic data has created doubt. Despite solid corporate earnings and few reasons for concern about the economy, the volume of worried voices has notably increased.
- How stable are stablecoins? – With US government promotion, and supported by actual money, stable coins are touted as real money crypto; all the benefits, but none of the volatility – perhaps.
- Serial French government collapse isn’t a Euro crisis – Au revoir to the latest French PM – we look at why this is not a Liz Truss moment for Macron as he tries to curb government pension spending on an electorate that appears to be addicted to it.
And to follow is the latest review from RBC Brewin Dolphin which was clearly written by an Elton John fan.
‘It’s a little bit funny, this feeling inside’ but despite an initial tricky start to 2025, which came on the back of Donald Trump’s “Liberation Day” tariff announcements, global markets have been resilient. The likes of the S&P 500, the Nasdaq, and gold prices have hit all-time highs multiple times this year, which your client’s portfolios have benefitted from.
While short-term headlines such as the recent US government shutdown have dominated news headlines, markets appear to be looking beyond any near-term disruptions, with confidence driven in part by long-term structural themes, such as artificial intelligence (AI).
As shown below, Nvidia now represents over 5% of the MSCI All Country World Index and now even surpasses the 4.78% share represented by the entre Japanese stock market, the world’s 3rd-largest market. By comparison, China, the UK, and Canada account for 3.33%, 3.23%, and 2.92%, respectively. Nvidia’s contribution to the index is now larger than France and Germany combined, which as a dominant artificial intelligence player, demonstrates the market’s enthusiasm around the future potential of the technology.
It is not just Nvidia, as many major firms across the US, Asia, and Europe are committing significant capital into developing the computing, memory, and energy capacity needed to support next-generation AI systems. Recent announcements involving companies such as Nvidia, Samsung, and Hitachi reflect the scale of this investment cycle – and the degree of global collaboration involved. For investors, this level of sustained spending is a clear vote of confidence in AI’s long-term economic impact.
AI-related companies have driven most of the US stock market gains in 2025, and the theme continues to attract global capital. Notably, AI-related spending is now estimated to account for as much as 40% of US GDP growth this year. While it remains to be seen how broad the productivity gains will be, for now, investor sentiment remains firmly optimistic.
Risks Always Remain
While we remain excited by the future of AI, it is worth noting that the strength in US equities is not evenly spread. Most of the gains have come from a small group of large technology and AI-related firms. Some analysts argue that the US is increasingly reliant on the success of AI to offset recent headwinds. In addition, structural challenges such as rising debt levels and high tariffs continue to pose long-term risks to the US economy.
September also saw further announcements of massive deals in the AI sector, with Nvidia announcing plans to invest $100bn in OpenAI. The proceeds are likely to be used to secure Graphics Processing Unit (GPU) capacity, with part of the investment ultimately flowing back to Nvidia as sales.
Such vendor financing deals are not a new financial innovation. Similar financing arrangements were common in the dot-com era to fund the build-out of fibre optic infrastructure, which could be viewed as a cause for concern. However, Jensen Huang (CEO of Nvidia and pictured here) is one of the few tech leaders remaining from this period. The circularity of these types of deals does raise questions on sustainability of GPU demand, and some believe this could increase the fragility of the continued AI-driven rally; however, this does not appear to be slowing down at this stage. Many investors still see AI as a long-term force that could help improve productivity, reduce inflation pressures, and stabilise debt burdens over time. Whether those expectations are fully realised remains to be seen – but for now, the narrative is supporting market valuations, and we are happy to continue having diversified exposure to the sector and AI related stocks.
All Times Highs a Cause for Concern?
While many indices around the world have been hitting all-time highs and delivering strong returns for investors, it may leave some now wondering whether the market is near its top and whether now is a good time to sell. However, historical analysis covering the past century suggests this could be the wrong thing to do. Stock markets hitting record highs is not as concerning as some might think. Reviewing every month since January 1926, the market was at an all-time high 31% of the time (nearly 1 out of every 3 months).
Interestingly, analysing the subsequent 12-months following an all-time high, investors on average have made a return of +10.4%, compared with +8.8% when markets were not at their peak. After two and three years, the returns are broadly in line with the long-run average, as the below chart shows. The data looks at US large-caps’ average inflation-adjusted returns.
The thought of investing cash when the stock market is at an all-time high may feel uncomfortable. But should it? The conclusion from the below analysis of stock market returns since 1926 is that it shouldn’t.
There is also evidence to suggest that selling when markets hit new highs (and therefore feel like they may be nearing a peak) is also the wrong thing to do.
$100 invested in the US stock market in January 1926 would have been worth $103,294 by the end of 2024 in inflation-adjusted terms. A strategy that switched out of the stock market and into cash for the next month whenever the market hit an all-time high (and went back in again whenever it wasn’t at one) would only be worth $9,922 over the same period.
At any given time, there may be very valid reasons for us to dislike certain stocks or sectors, but the market being at an all-time high should not be a reason to be concerned when assessing in isolation. There is always something to be worried about and there will forever be periods of volatility, but in the long term, prices follow fundamentals.
In Summary
While all-time highs, political noise and delayed economic data in the US have created some uncertainty, pleasingly markets are looking through the short-term volatility and continuing to push forward.
Let’s just hope this Saturday night is not alright for fighting!
Stop W(h)ining
MoneyWeek reports that wealthy older investors are being targeted by scammers pushing fake luxury wine investments, with experts warning of the dangers as one recent operation defrauded pensioners out of a total of £6 million. Fine wine investment – sometimes referred to as a ‘passion asset’ because enthusiasts enjoy the product as well as hoping for some financial return – is a niche alternative asset market fraught with risk for the novice. But fine wine’s typical exemption from capital gains tax (CGT) is sparking investor interest amid tightening tax rules. A report from WineCap in April found 96% of UK wealth managers expect demand for fine wine to grow in 2025 – beating out all other luxury assets.
The proportion of fine wine in high-risk investment portfolios has more than doubled – from 12% in 2024 to 26% in 2025, the report found. However, fraud experts have said the wine industry is being infiltrated by investment scammers. They are specifically targeting pensioners, claiming to guarantee a more profitable offer than their standard pension pot delivers. Paul Hampson, fraud expert and CEO of CEL Solicitors, said: “The luxury wine market is a popular investment opportunity that can pay off, and it’s this that makes it an easier sell for scammers to push. “Barrels of wine or even some bottles gain value over time.
Scammers will create platforms listing the wine for sale, an investor will buy it with the understanding that the seller will keep hold of it and then sell it again one day for an increased value. “Some scammers actually do have barrels for sale, but will sell to people for an inflated cost, a cost the wine barrel will never reach, no matter how much its value rises.”
Miscellaneous
The reason we go to seminars is not just to make sure we keep up with our continued professional development points, but to find out new ideas and sometimes to be reminded about old ones.
This week we saw a video at one such seminar that I think I have included in this bulletin before. It’s a powerful message so I make no excuses for using it again. It is a stark reminder of why life assurance and critical illness policies are so important and why just relying on what the company provides by way of death in service and sickness benefits might not always be enough. Please click on the link below, and if you are anything like me have a box of tissues nearby:
This was made even more meaningful by having been introduced to us by the aunt in the film so we know it is all true and what an impact having the right policies in place can make. I hope beyond hope none of you, or any of your family, find yourself in the same situation but if it should happen you might be comforted by having some insurance in place. I know it made a massive difference not just in terms of financial support. Please speak to your usual JB advisor if you have any questions.
Talking of which, for those of you who had the pleasure to meet Andy Watt, Friday was his last day with us, and he has moved on to pastures new. We wish him all the best with his new endeavours. The rest of the team remains ready to help you.