Monthly letter August 2025

Ket elements

August 2025 was not only one of the hottest moments of the year from a meteorological standpoint, but also from a geopolitical perspective.

Within the span of three days, D. Trump first met his counterpart V. Putin in Alaska and subsequently hosted the main European leaders at the White House, who were accompanied by V. Zelensky.

The effort to obtain at least a truce between Moscow and Kyiv was unprecedented and seemed to open some glimmers of hope. For now, however, such developments do not appear likely to have a concrete impact on the situation on the ground.

For Gaza, instead of the truce being discussed in Ukraine, the prospect of a new escalation is strongly emerging: the Israeli government is preparing the occupation of Gaza City despite the army’s warning, worsening a humanitarian crisis that almost everyone acknowledges.

The chapter on American customs tariffs today appears less relevant, overshadowed by the weight of more pressing international issues and relegated to an almost technical role.

It is worth noting that the decision on the amount of tariffs to impose on China continues to be repeatedly postponed.

“ Trump has no authority to remove Federal Reserve Governor Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.” The lawyer (A. Lowell) of Federal Reserve governor L. Cook announces the start of a legal battle.

The space devoted to the economy and central banks continues to experience increasing interference from U.S. politics. Pressure for the Fed to significantly cut interest rates comes directly from D. Trump, though at times Treasury Secretary S. Bessent has joined the chorus.

The president is also attempting to influence the composition of the decision-making committee directly. In this context a request for the resignation of Fed governor, L. Cook, has emerged, accused of falsifying documents to obtain a mortgage.

Public opinion and investors are now openly talking about a direct attack on the central bank’s independence—an eventuality that, to put it mildly, would hardly be well-received.

The annual central bankers’ symposium organized by the Kansas City Fed in Jackson Hole, Wyoming, from August 21 to 23, lived up to high expectations. In his speech, Fed Chair J. Powell confirmed that the risks of rising inflation, fueled by tariffs, and those of a contracting labor market outline a complex scenario, as they would require opposite responses from the central bank.

Expectations had been for an inflexible Powell, emphasizing the priority of fighting inflation and thus less inclined to support growth; his words, however, delivered a positive and dovish surprise: the FED next step should be to lower interest rates.

On the macroeconomic front, data released in Europe and the United States did not change the outlook: ahead of the September meetings, consensus points to a stationary ECB and a Fed ready to resume cuts.

This consensus is also confirmed by signals coming from various members of the respective boards.

Prospects

September is traditionally the month with the worst seasonality for equity markets. The return from holidays often coincides with a period in which investors tend to prioritize risk assessment over the search for opportunities. In this context, attention is focused on the monetary policy decisions that the main central banks will be called upon to make over the next three weeks.

Alongside the usual sensitivity to economic data and central bankers’ comments, there is now the Trump administration’s attempt to directly influence the Fed’s actions—an initiative that represents a source of uncertainty rarely seen in the past. In general, markets have shown a certain coldness in reacting to geopolitical news, but they may prove more vulnerable to specific factors.

One example is what happened last April: the introduction of tariffs did not immediately raise concerns in the bond markets, but after a few days these markets were shaken by marked volatility, alarming investors.

China deserves attention: the only country with which D. Trump has not (yet?) introduced tariffs, Beijing is currently intensifying efforts to strengthen its international ties and counter the U.S. sphere of influence.