Monthly letter April 2025

KEY EVENTS

April was an intense month, far beyond all expectations—even though those expectations were already particularly high.

The two photographs included in this letter refer to events that took place at the beginning and end of the month; in reality, there are many images received almost daily that will continue to stay with us for a long time.

On Wednesday, April 2, the announcement of the imposition of tariffs by D. Trump marked the beginning of a particularly turbulent period. While the world appeared more in shock than ready to respond, China, already by Friday the 4th, announced similar countermeasures against the United States.

The following week was marked by an escalation of tensions, with increasingly heated statements—mainly from Washington—and growing concerns in global markets.

Only after mid-month did the rhetoric begin to lose intensity, giving way to more cautious tones and a few timid signs of openness to dialogue.

It is difficult to clearly understand what factors determined (and still determine) the evolution just described. However, it seems reasonable to believe that any further worsening of trade tensions could have led to unsustainable conditions in financial markets, which were already severely tested by the intense sequence of events.

The geopolitical landscape shows no signs of improvement. Initiatives aimed at reaching at least a truce between Russia and Ukraine have produced no concrete results.

In the Middle East, there has been a resurgence of violence and, in the case of the Gaza Strip, international media report a situation that has now become dramatic.

“There are weeks in which decades happen.”
The attribution of this phrase is uncertain (it is believed to be by Lenin), but its meaning is unmistakably clear.

The events described above have not yet produced tangible numerical effects on the macroeconomy, but they have generated a marked sense of uncertainty that is causing concern across the board.

Central banks have assured that they have heightened their level of vigilance and are ready to act should the situation require it.

These intentions are made even more complex by the limited visibility of the future outlook: is the greater risk a slowdown in economic growth or a return of inflationary pressures?

At its regular meeting, the ECB reduced interest rates by 25 basis points (as expected by the markets). The Federal Reserve, on the other hand, had no scheduled meetings during the month of April (the next is planned for May 7), and the usual statements from individual members therefore received more attention than usual. Further complicating the picture were public attacks by President D. Trump against Chairman J. Powell.

Chinese authorities, at least for the moment, have focused on the trade dispute with the United States and have not introduced any economic stimulus measures aimed at offsetting the effects of the trade war. So far, the Q1 2025 earnings season has not presented any particular issues, although executives’ guidance on the future outlook remains, as often is the case, vague.

Prospettive

What happened in the first fifteen days of April demonstrated just how ready financial markets are to price in the risk that trade tensions could lead to potentially catastrophic consequences for the global economy. Starting from mid-month, the worsening of political rhetoric came to a halt, and investors quickly acknowledged the change, revising their fears downward.

This gave rise to a rollercoaster of sentiment driven by conflicting forces—a condition that, for the time being, does not appear likely to change in the short term.

The performance of financial assets will continue to be strongly influenced by multiple factors: primarily the political debate, but also signals from central banks, the release of macroeconomic data, and corporate earnings.

All of these elements are capable of keeping both the level of concern and volatility high. We will continue to manage portfolios with caution, remaining ready to seize opportunities that will inevitably arise—whether in terms of buying or taking profits. In other words: it will be essential to maintain as balanced an asset allocation as possible.