Monthly letter March 2025

Key events

Donald Trump once again confirmed in March his consistency with a communication style and strategic vision that remain true to themselves: direct, unsettling, and deeply unconventional.

Yet, despite the passage of time and the repetition of his approach, the world continues to be surprised with the U.S. president actions that are so far away from the traditional concept of diplomacy—something once unimaginable for someone in such a position of responsibility.

This form of communication and international interaction remains difficult to assimilate precisely because it radically breaks with institutional conventions.

It seems evident that this boldness is part of a strategy aimed at maximizing his room for maneuver and power. However, it carries a high risk of unexpected and potentially damaging side effects, both domestically and in global relations. Both Trump and Treasury Secretary Bessent have repeatedly stated that achieving significant improvements requires first enduring a short-term period of setbacks.

At the beginning of the month, Germany’s new chancellor, Friedrich Merz, unveiled his political agenda, drawing particular attention with the announcement—later ratified by parliament—of the abolition of the so-called “debt brake.” This measure, aimed at boosting the economy through increased investments, particularly in defense and infrastructure, marks a significant shift from Germany’s traditionally cautiousness on fiscal policy.

While the transition from intentions to actions did not surprise the most attentive observers, the emphasis and scale of the move triggered strong reactions—an indication that such a decisive paradigm shift from Berlin was far from a given.

“Especially in current conditions of rising uncertainty, we will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary-policy stance,”
(Christine Lagarde, President ECB 20.03.25)

Central banks provided significant insights over the course of the month: the Fed, ECB, and SNB did not hide their concerns about the growing uncertainty related to the tariffs imposed by the United States.

The ECB and SNB also indicated that recent interest rate cuts have now pushed monetary policy outside the “restrictive” zone. In other words, any further expansionary measures will increasingly depend on the evolution of the economic cycle and, above all, inflation trends.

Statements from Frankfurt and Bern conveyed a clear message of caution, emphasizing the need for careful assessment of fiscal policy initiatives to avoid unintended side effects on macroeconomic stability.

The Fed had already expressed a similar stance at the end of January and reaffirmed it during its regular meeting on March 19, stressing that its mandate requires balancing price stability with the promotion of the highest possible level of employment.

This was an implicit reminder of the need to consider the real economy, even in a period of geopolitical and trade uncertainty.

Prospects

The macroeconomic landscape remains characterized by uncertainties related to geopolitical developments, fiscal policy directions, and the behavior of entrepreneurs and consumers. Central banks are acting cautiously, signaling that any new monetary stimulus will depend on inflation trends.

In this context, diversification remains the primary tool for navigating complexity. A well-balanced portfolio that integrates uncorrelated assets and complementary strategies is the best approach to managing volatility and preserving value in the medium term. We prioritize high-quality exposures, resilient sectors, and regions with strong fundamentals while avoiding excessive concentrations that could amplify risks.

The ability to adapt and manage risk dynamically will be crucial. We continue to believe that an active, disciplined, and well-diversified investment approach is key to confidently facing challenges and selectively seizing emerging opportunities.