Reports with pessimistic analyzes on Wall Street have multiplied after Donald Trump‘s latest outings. As proven by the facts, however, it was the stock markets of the Old Continent that paid the price for the volatility
«Sell America», suggested an article by Reuters at the end of January. There was some logic: why, after the new ones duties threatened by Donald Trump to the European countries that had sent soldiers to Greenland, the conditions could have closely resembled those of “Liberation Day”, in April 2025. And, instead, the European stock markets lost much more than Wall Street, a sign that the American stock market tends to see some good in the economic and neocolonial policies of its president. Or, perhaps, simply because the purchases of small investors supported the S&P 500 index, who they care little about the risks of the new “Donroe doctrine”. In fact, their optimism about the stock market, as measured by the «AAII» index, has risen to the highest level of the last four years.
Optimism prevails over pessimism
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If you believe that the Vix index really measures investors’ fear, it would seem that no one was scared: the index rose to 20, six points below the peak last October, when nothing happened at all. The new world order designed by Trump, with the corollary of incentives, tax cuts and (perhaps) ultra-expansionary monetary policies for internal use, pleases Wall Street and optimism is sky-high even among large investors.
He feeling
In the January BofA survey, a “large majority” of these has decided not to protect itself from a possible market fall in the next three months, showing an exuberance that has not been seen since July 2021. But on the bond market, little frequented by retail customers and dominated by investors with much longer time horizons, sales were seen and the yield on the 10-year Treasury rose by 18 points, to 4.3%, the highest since August, while on the Bund or BTP the pressure was minimal.
The weakness of the dollar
And the «Sell America» appeared evident on the currencies, with the dollar weakening against the euro and above all on the Swiss franc, considered a sort of safe haven asset: on a par with gold or silver, which rose by 6-8% in just three sessions, and this time, it seems, more for protection than for speculation. The hypothesis that a geopolitical and, consequently, economic disaster is looming is not contemplated by the stock markets, maintains the Wall Street Journal: partly because some investors have become accustomed to Trump, some because they believe that his threats are purely verbal, others because they are convinced that the Supreme Court will reject his ambitions for global expansion, as well as generalized tariffs, and, finally, because they are counting on the defection of some Republican parliamentarians to frustrate the White House’s claims to subjugate the Fed. Paradoxically, Trumpists and anti-Trumpists agree on the stock market which must rise by virtue of rapidly growing profits, a galloping economy, subsidies and tax incentives, and, finally, falling interest rates.
The US crossroads
The hypothesis that this cocktail creates inflation and that deficit and public debt could explode is not contemplated. Since it is “difficult to imagine a new world order, it is also plausible that investors will find it difficult to put a price on a prospect they completely ignore”, comments the WSJ with a hint of sarcasm. After all, he says, it was like this on the eve of the First World War and also the Second.
More dark and disturbing is UniCredit’s analysis, already in the title: «The rise of America’s predatory empire». “The era of benevolent American hegemony is over,” writes Edoardo Campanella. There is no ideology, but pure mercantilism that aims to «extract economic and strategic advantages from nations chosen based on geographical proximity, their geopolitical influence or the abundance of natural resources”. It is not a question of redesigning global spheres of influence, because the main reason for this “predatory form of power” is to “suppress the rise of China”, even at the cost of arousing dangerous tensions.
Deregulation
There are no longer international rules, but only national interests, that is, business opportunities for America and its companies. In this context “Europe risks finding itself crushed”: a “herbivorous species in a world increasingly dominated by carnivores”. What should he do? The UniCredit economist says nothing about this except that the context is becoming increasingly difficult to predict and that, in the long run, Trump’s policies will end up weakening the dollar. After all, what can European countries do to counter Trump’s wishes? Deutsche Bank suggests that 8 trillion dollars, between bonds and shares, in the portfolios of investors in the Old Continent can influence US Treasury yields and inflation. But it is difficult to imagine that our investors, especially private ones, decide to sell in retaliation for the duties, with consequent capital losses. The Financial Times estimates the amount of Treasuries owned by European investors at around 3 trillion, much more than those held by China. The mere threat of selling part of it or not buying others it would be enough to raise Treasury yields, worsening financial costs and increasing the federal deficit which, already at 7% of GDP, appears out of control. Trump himself declared that one percentage point of interest rates is equivalent to 360 billion in charges every year. For now we can hope that Congress and the American Supreme Court can stem Trump’s follies, but without resigning themselves to his bullying. In Davos, the heartfelt words of Canadian Prime Minister Mark Carney sounded like a warning. Paraphrasing Thucydides, he recalled: it seems «that the rule-based order is vanishing. Let the strong do what they can, and the weak suffer what they must.”
date: 2026-02-08 13:22:00