By Gareth Horsfall
This article is published on: 6th February 2025
Hello again and welcome to this E-zine. (Picture from the olive grove last Sunday morning as the sun was rising)
(Just a quick note to those people who are awaiting my promised E-.zine on the new UK IHT rules which came into force in Oct 2024. I have now completed a draft and will be sending it out soon!)
Since my last newsletter, back in December, I have received many emails of congratulations on the new house and equally many tips of how to manage the land we have. Thank you to you all. Please keep the tips and tricks coming: for example, leaving wild areas for the health of the fruit trees and encouraging diverse wildlife – seems logical but then to one who has never had to deal with these things, it is all new. I am learning new things all the time and interested in the land and seeing it develop. My wife is taking on the task of the house and making sure it is furnished as we would eventually like it to be.
Thankfully, the land doesn’t need a lot of money spending on it, it’s more brute labour force which I am maximising to my benefit by staying fit in the early mornings before I throw myself at the computer.
I have also enlisted the help of a local gardener who , in the last week or so, has helped free 3 very old olive trees from years of being covered by ivy and by other much larger pine trees. They are now free to breath again and will get their well earned ‘potatura’ in a few weeks. (See photo below – there is one in the background, if you can see it!).
I have been busy piling the wood cuttings from the various trees to provide me with a varied menu of BBQ wood this summer! Finally, (the last thing about the house in this Ezine, I promise!) the trattorino tagliaerba arrived recently. Thank god for that because the grass is starting to grow again with the warmer weather and I was starting to worry about managing all the grassy areas with just the push mower. It certainly kept me fit, but in the end it was a bit too much. Now, I just have to decide which bits to mow and which to leave to nature….decisions, decisions!
Anyway, enough of my land management problems.
In this E-zine I wanted to tell you about The Spectrum IFA Group Annual Conference which I attended between the 20th and 24th Jan, this year in Casablanca, Morocco.
We had some of the usual asset managers and specialist firms there from Rathbones Asset Managers, Evelyn Partners, New Horizon, LGT Wealth management amongst others. Interestingly the first day of the conference was Donald Trump’s inauguration day and so we were observing live some of his first actions. He was very much a topic of conversation during the conference; so much so, that since his first day in office things have moved so quickly that I was thinking of not writing this E.zine because almost as soon as I wrote something then it either came to pass, or was wiped aside with another executive order. However, in the last few days a number of people have contacted me about what he is doing and if it is going to cause inflation, an economic downturn in the US and across the world and how it will affect your investments. So, with this in mind I decided to provide some of the information that I gleaned from the investment managers’ minds. Those people who are right at the coal face of what is likely to be a profitable period for America, but one with increased investment market volatility.
PRESIDENT TRUMP….again
I will provide an abbreviated version of what his Presidency is likely to entail because by the time I have written this and then edited it, it is highly likely that things will have changed again. So here are some bullet points we learned from the conference:
Whatever your view is on President Trump the consensus is that he is going to be good for the American economy. He is also about trying to bringing business back to the USA, putting the USA first and stimulating business in the US itself.
He can only run for this final term as US President therefore he has 2 years before the mid terms when the situation could all change again. So, the thinking is that he is in it to make a BIG splash and create large improvements for the US economy in a short time frame. What has he to lose?
We have already seen that he is going to use tariffs as his weapon of choice, at time of writing Canada and Mexico already seem to have caved in to his demands. The tariff threat is being used merely as at a threat with the idea to create change. And it’s no surprise, re Canada and Mexico, given the figures that we can see below.
** Don’t listen to what he says, watch what he does **
DEREGULATION: Expects big things in this regard: less red tape, cutting the tax code, stimulating business and if you think this is a bad thing, then have a look at the slide below courtesy of Evelyn Partners:
Small business and consumer confidence rose significantly as a result of deregulation during Trump’s first term in office and confidence is rising once again.
DRILL: Some of the best performing stocks in 2024 were mining and explorations stocks: Chevron, Shell and Schlumberger, to name only 3. President Trump has made executive orders to drill for shale gas and open oil fields in the USA as well as mining for rare earths. He wants the US to be energy and resource independent again and become a net exporter. This has obviously come at the price of withdrawing from the Paris Climate Agreement and he has turned back investment in ethical/sustainable projects which poses the question whether this could mean difficult times for wind and solar?
IMMIGRATION: Regardless of the headline news re: illegals being sent back home, the main point is that he is going to make it harder to get into the USA, but it might be important to remember the following:
Unlikely.
DOGE: (The Department of Government Efficiency headed up by Elon Musk): One of the first orders from the new department was that all government workers must get back to work in the office 5 days a week. Is this good for productivity?? Elon Musk cut 80% of Twitter staff when he bought it, is he about to do the same at Government agencies? Certainly some of the news coming out of this area already is quite interesting from USAID being involved in funding groups to overthrow foreign governments, to blank cheques being written in government agencies without checking what they are being allocated for. The goal is to cut $2 trillion from the government budget, even Elon Musk said that this was a long shot, but watch this space!
(On a more realistic note, there are real life effects of these cuts. One of our relatives in the US is a dog trainer and Professor in animal training and was applying for a job in a California University, all hirings have now been put on hold in academia and she may be back to living in a camper van again as she goes from job to job!)
JYNA: Did you know that this is how President Trump refers to China? (I had no idea)
Apart from the recent 10% tariff imposed on Chinese goods into the US, there is really only one thing to be concerned about re China and the US: Taiwan.
China holds the greatest stock of rare earths which are required in all the latest technology and chips, so China holds an ace card in its hand.
* In fact 90% of high end chips produced by Nvidia require these rare earths.
* 80% of Japanese trade goes through the Taiwanese Strait.
* Access to technology is the US’s main priority. So if China were to invade Taiwan ( considered unlikely – what could they benefit from it?), then what would be the US’s response?
Whilst the US / CHINA spat is the pretext political risk to the world, President Trump is about making deals, not starting wars and compared to other Presidents he has a good track record:
Whilst the US / CHINA spat is the pretext political risk to the world, President Trump is about making deals, not starting wars and compared to other Presidents he has a good track record:
(This slide might be difficult to read, but it’s worth expanding the text to see which US Presidents started the most new wars. A big surprise to me was that Ronald Regan and… Barack Obama! share the record (7 each) – Donald Trump – zero!)
So considering all this, what was the message from the investment managers at the conference?
Trump will be good for America, he will stimulate growth in small to mid sized companies in the US. He will bring jobs and businesses back to the US and he will likely be good for your investments where you have exposure to the US stock market. We may also see a bull market in commodities as well.
But it will come at a price and one which we, as investors, must be mindful of.
INCREASED VOLATILITY: More swings in assets prices based on what I stated above:
** Don’t listen to what he says, watch what he does **
Markets will respond to what he says, but as investors we need to keep our eyes on the actions he takes and cut out the noise. It will certainly be an interesting time but could turn out to be a profitable one for those who ride his Presidency out, and, yes, markets will likely fall at some point and we will all feel some pain for a short period, but remember that investing is mid to long term and most of us have been through something similar, if not a lot worse , before…
And if you need confirmation of this then check out the following slide:
Equities/stocks are the drivers of growth in most portfolios, what you can see here is that by riding out any invasions/wars, investors in US stocks, in most cases, after just 6 months were experiencing positive returns once again. A good sign for holding your nerve through equity market volatility.
The next E-zine will be the update on the new UK IHT rules which came into force in Oct 2024, which could have an impact on any UK person living in Italy.
If you would like to discuss these or any other tax or financial planning related issues in Italy then please don’t hesitate to contact me on gareth.horsfall@spectrum-ifa.com or call / message on +39 3336492356
Always happy to help where I can!
