Nature abhors a vacuum, and so do markets. As old global balances crumble, new flows, new alliances, and new opportunities emerge. The void is not a threat; it is a space to be conquered by those who know how to adapt.

Table of Contents

• It’s hot… (and not just “a close call”)

• Few numbers

• Nature abhors a vacuum

• Necessity makes the law

• B-R & H Finance

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Market Review

It’s hot… (and not just “a close call”)

After several weeks of extreme tension, the U.S. administration has regained some control. The tariff escalation, which had briefly rocked Wall Street and pushed the bond market to the brink of a meltdown, now seems, for the time being, contained. The coordinated intervention by the Treasury Secretary and the Fed helped calm nerves, restoring a semblance of order to still-fragile markets.

The White House also sent a strong signal by ceasing its attacks on the Fed. Jerome Powell, for his part, spoke plainly: he clearly identified the risks linked to rising tariffs, warning of both upward pressure on inflation and a slowdown in economic activity. His straightforwardness seems to have been heard. Scott Bessent, a Trump advisor, confirmed that Powell's position as head of the Fed was not under threat and that discussions were underway to try to normalize the situation. The message got through.

This shift in tone was enough to reignite investors' appetite for risk. Betting that the worst of the trade war may now be behind us, investors have regained a measure of optimism. This renewed confidence was reflected in the rise of major global indices, even though many are aware that the underlying damage to supply chains is far from resolved.

Performance of Major Indices:

• All European indices are in positive territory year-to-date (YTD): IBEX 35: +15.28%, DAX: +12.64%, FTSE MIB: +10.79%, SMI: +4.02%, FTSE 100: +3.55%, CAC 40: +2.37%

• U.S. indices ended the month better than expected: S&P 500: -1.12%, Nasdaq: +1.1%. However, they remain in negative YTD territory (see LinkedIn post for details).

• The Africa Titans index posted a strong YTD performance of +14.95%, while the MSCI World index is still in the red at -2.14%.

Also noteworthy:

• Gold continues to benefit from ongoing uncertainty, hitting repeated record highs around $3,313 per ounce (+26% YTD).

• All long-term government bond yields are declining, including, surprisingly, U.S. Treasuries (10-year: 4.18%).

• A major concern for European and Swiss investors is the weakness of the U.S. dollar, down 10% YTD against the euro and 8.84% against the Swiss franc (CHF). This amplifies losses on U.S. indices (see article in the Wealth section).

Stock Highlights:

• Hermès has overtaken LVMH as the top French market cap, benefiting from the latter’s recent stumble, despite a turbulent sector.

• Novo Nordisk, after a deeply disappointing YTD performance (-33.57%), has just signed a licensing deal with Hims & Hers to distribute Wegovy.

Few numbers

• 72% of French family-owned businesses generate more than half of their sales within their home region, compared to 51% for non-family businesses.

• Around 70% of countries worldwide had China as their top trading partner in 2023.

• Americans spend only 35 minutes a day socializing, compared to nearly three hours watching television, despite having maintained about five hours of daily leisure time over the past twenty years.

Editorial

Nature abhors a vacuum

Since Antiquity, thinkers have pondered this mystery: does a true vacuum exist in nature? Aristotle firmly claimed it was impossible, convinced that any empty space would immediately be filled by the surrounding matter. This concept, known as horror vacui, has crossed the centuries, influencing both physics and our way of understanding the world. It was not until the 17th century, through bold experiments with mercury columns, that Blaise Pascal demonstrated that yes, a vacuum could exist; but that it remained unstable, fragile, and prone to being invaded at the slightest opportunity.

Today, the dynamic is strangely similar in world affairs. The damage is done: the great maps of international trade have been durably reshuffled. Three years of war in Ukraine have redrawn the flows of exchange, while Donald Trump’s election, and his first one hundred days in office, have accelerated the upheaval. Trump has reignited the tariff war, imposing punitive tariffs of over 100% on certain Chinese products. Yet Beijing is not yielding; since Trump’s first term, China has been steadily diversifying its trade routes toward Asia and Europe, gradually reducing its historical dependence on the American market. In 2005, Chinese exports to the United States accounted for 11% of China's GDP; by 2024, they represented only 3% — a collapse that signals a profound reshaping of global interdependencies.

Europe, for its part, finds itself torn. Once courted by Washington, now largely sidelined, it navigates a climate of mistrust and opportunism. This love-hate relationship provokes a deep questioning of traditional alliances. As the old balances crumble, voids appear — but never for long. China is seizing the moment: in 2025, it is building more commercial ships than the rest of the world combined. Meanwhile, the United States, once an industrial giant, now barely constructs five commercial ships per year, making China an unavoidable force in global maritime trade (see JD Vance’s speech, March 2025). China is holding its ground, but cracks are beginning to show; this past weekend, it announced the removal of certain tariffs, notably on semiconductors — which China imports to the tune of USD 385 billion per year, mainly from the United States — and on ethane, a critical gas for plastic production (50% of which comes from the US). History is being rewritten, and those who can understand these new flows, rather than lament the old order, will seize the best opportunities.

History teaches us that every vacuum is an invitation: an invitation to reorganize, to adapt, to conquer. Napoleon learned this the hard way with the Continental Blockade: in trying to choke the British economy, he inadvertently opened new markets for England and hastened his own downfall. Today, Russia, hit by sanctions, has pivoted southward, anchoring itself more deeply to the BRICS and emerging markets. The emergence of alternative trade corridors, the legalization of parallel imports, and the revival of unexpected bilateral agreements are clear signs of this realignment.

Modern researchers studying the dynamics of vacuums — whether in fluids, biology, or social systems — confirm that a vacuum is fundamentally unstable. It generates forces of attraction and mechanisms of self-filling. In forests, a fallen tree invites an explosion of new life; in markets, a deserted sector sees the birth of new enterprises eager to take its place.

This is precisely where the opportunity lies: in this perpetual movement of creation after chaos. If financial markets today seem disoriented by the volatility of US interest rates and the questioning of the dollar's dominance, it should not be seen as a collapse, but rather a displacement. New routes, new currencies, and new alliances are already taking shape. The space left open is waiting to be conquered by those who know how to dance in the rain, as Seneca once suggested: "Life is not about waiting for the storm to pass, it’s about learning to dance in the rain."

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Investments

Necessity makes the law

When traditional routes close, new paths emerge. Today, the dynamics of global trade follow this old adage more than ever: "nécessité fait loi" (Montesquieu). The embargo on Russia has opened parallel routes via Turkey and the Emirates; iPhones, for example, continue to arrive in Russia, simply through Dubai or Istanbul. And when a product is missing, consumers adapt: Huawei, Samsung, and Xiaomi are gaining ground where Apple is slowing down. This phenomenon is not limited to smartphones. Loyalty to American brands is eroding everywhere. Nike? Replaced in some markets by On, the Swiss brand that keeps growing. Tesla? Gradually overtaken by BYD, the Chinese champion in electric vehicles. Even Starbucks faces a resurgence of local and regional coffee shops.
However, not everything is so easily replaceable: Microsoft or Google, with their near-monopolistic positions in cloud and software, remain pillars for which alternatives are still limited.

An investor looking to disengage from U.S. stocks would find Alibaba instead of Amazon in their portfolio. Saudi Aramco or Total instead of Exxon Mobil. Roche instead of Pfizer. Airbus instead of Boeing. HSBC instead of JP Morgan. Nestlé instead of Pepsico. Vodafone instead of AT&T. Komatsu instead of Caterpillar. Allianz instead of MetLife. Tencent instead of Walt Disney, and so on. At B-R & H Finance, we do not recommend this strategy, but we simply highlight that alternatives do exist. They have the advantage of not being denominated in USD.

For now, zinzins (institutional funds) have only participated in the bloodbath through ETFs, which now represent a significant share of the market. Pension funds, insurance companies, and other large institutional investors take their time: their investment frameworks evolve slowly because they think in the long term. It is their decisions regarding the U.S. market, Treasury bonds, and the dollar that will ultimately set the true trend through the end of the year.

Today, traders are still setting the pace; tomorrow, it will be long-term investors who steer the direction. Many prefer to wait until "the dust settles" before stepping in. A large number of them think in dollars; for them, the current correction is not necessarily a problem, but rather an entry opportunity.

At B-R & H Finance, we discovered Ethane through the recent Chinese announcement (see above). This gas, largely ignored by the general public until now, is crucial in the production of modern plastics. In 2024, the United States dominates global production, with 2.8 to 3.0 million barrels per day, extracted mainly from the Permian Basin (Texas, New Mexico) and the Appalachian Basin (Pennsylvania, West Virginia). Texas and New Mexico alone accounted for 63% of national output. American Ethane Company is the leading producer and the largest exporter to China. ExxonMobil follows closely behind.

But beware the grain of sand: while China remains a massive client (absorbing 50% of U.S. ethane exports), political tensions could encourage Beijing to seek other suppliers. Canada, the second-largest Western ethane producer, could seize the opportunity in a sort of "return to sender" dynamic. So far, we have not found any major listed companies...

Wealth

A double punishment

The dollar has collapsed against the CHF, EUR, and even the STG over the past few weeks. Trump is celebrating; but investors whose reference currency is the Swiss franc, the euro, or the pound sterling are suffering a double punishment. Even a triple penalty: not only is performance in dollars eroding once converted, but the U.S. market continues to set the tone for global financial markets, dragging European and Asian markets down with it, each at its own pace.

The dollar remains the gravitational center (crater ?) of global markets. About 60% of global foreign exchange reserves are denominated in USD. More than 50% of global trade is settled in dollars. The weight of U.S. assets — equities, bonds, commodities — imposes an indirect exposure to the dollar in almost every portfolio. For an investor in EUR, CHF, or STG, this creates several major effects:

• Distortion effect on performance: A rise or fall in the dollar can amplify or reduce the portfolio's real performance, independently of the intrinsic performance of the underlying assets.

• Asymmetry in perceived risk: What appears stable or profitable in dollars may not be in the local currency, and vice versa.

• Imported or neutralized inflation: The cost of living, especially through energy, commodities, or certain consumer goods, is directly tied to the dollar.

What to do in practice?

• Always think in terms of "future living currency": Euros for a retiree in France, Swiss francs for a retiree in Switzerland, pounds sterling for a resident in the United Kingdom. Performance benchmarks must be aligned with this future living currency, not with the dollar.

• Diversify with discernment: Seek true geographical and sector diversification, avoiding simple replication of global indices that are overweight in U.S. assets.

• Actively monitor currency effects: Do not rely solely on gross performance figures but carefully analyze returns adjusted for the reference currency.

Our conclusion

Our clients do not have the luxury of ignoring currency issues. The dollar remains an unavoidable component of the markets, but their wealth reality remains local. The real challenge is not to "play" the dollar but to integrate its influence while building a robust strategy aligned with their future life plans.

The reference currency is not a box to tick, it is a strategic anchor.

B-R & H Finance

Founded in 2004, B-R & H Finance SA is a Swiss entity specialized in wealth management. We offer a full range of personalized and independent investment services and advisory solutions. Regulated by SO-Fit and authorized by FINMA, we are also members of the ASG (Swiss Association of Independent Asset Managers) and work with leading custodian banks.

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