T&V Letter | Q1 2025 - Open conversations about money, market uncertainty, U.S. tariffs in focus – and why diversification matters now more than ever.

Insight

People used to keep quiet about it. Today, families talk about money - and change their future in the process.

Who inherits what? Who takes responsibility? And which values should remain? These questions are no longer postponed, but discussed at an early stage - not out of a sense of duty, but out of a desire for clarity, trust and cohesion.

Estate planning is more than just distributing property or investments. It's about what really matters: Identity, leadership, perspective. Grandparents, parents and children sit down together, talk about the family business, about meaning, about what should remain. When everyone is heard, viable decisions are made - sometimes unanimous, sometimes challenging, but always valuable.

The nature of the dialogue is also changing: less instruction, more exchange. Responsibility is shared, knowledge is passed on. Especially when it comes to topics such as succession, inheritance law or financial education, it becomes clear how crucial a common understanding across generations is.

The fact that money is no longer a taboo is a welcome development. Where people talk, trust grows. Where families look to the future together, wealth becomes more than just a possession - it becomes a bond that connects generations and goes beyond the material.

Dear reader

The markets have shown significantly increased volatility in recent weeks. In the US, the new administration's protectionist trade policy is causing uncertainty. President Trump is announcing new import tariffs almost on a weekly basis - with the declared aim of protecting domestic industry. This is leading to rising import costs, uncertainty among companies and a potential slowdown in economic growth.

At the same time, the government is planning far-reaching cuts in state spending. Together with entrepreneur Elon Musk, Trump is pursuing the goal of significantly reducing the role of the state in areas such as infrastructure, education and energy. While this could trigger structural changes in the long term, it remains unclear in the short term how lower public investment will affect employment, demand and innovation.

For US companies, the new environment means a phase of increased planning uncertainty. Export-oriented companies are confronted with potential countermeasures from abroad. At the same time, new tariffs will make imported primary products more expensive, which will primarily affect industries with global supply chains - such as the automotive sector, mechanical engineering and the electronics industry. Higher prices on imported goods could also lead to lower purchasing power in the consumer sector. These developments are not without consequences internationally either.

Tensions with trading partners

The USA's international trading partners are observing developments with growing scepticism. Initial reactions, such as the announcement of counter-tariffs, point to a possible escalation. Countries with a strong focus on exports - including Germany, China, Canada and Mexico - could lose growth impetus if tensions persist for a longer period of time. Trade barriers of this kind tend to have a dampening effect on growth in the globalised economy, as they slow down investment and weaken confidence.

Endangered division of labour as a structural risk

In addition, new trade barriers are hampering the international division of labour - one of the key drivers of economic development. The increasing specialisation of national economies and the international division of production processes have made a significant contribution to increasing productivity and prosperity in recent decades. If these structures are weakened by protectionist measures, there is a risk not only of a decline in efficiency, but also a slowdown in global growth.

A paradigm shift is also emerging at multilateral level: while international cooperation and rules-based trade were considered the driving force behind global stability for decades, national interests are now once again taking centre stage. This not only complicates economic planning, but also political coordination processes in international organisations and trade bodies. Against this background, a further question arises.

Does the USA's trade policy serve to combat inflation?

What if the US government's trade policy is less motivated by protectionism and more a strategic means of curbing inflation? It is possible that those close to the President have considered how growth can be slowed down in a targeted manner - for example through tariffs, political uncertainty and pressure on the financial markets - in order to curb consumption and price-driving wealth effects. At the same time, such a policy could strengthen the USA as a production location by making imports less attractive and domestic suppliers more competitive. The aim is to reduce inflation in order to give the central bank room for manoeuvre to cut interest rates as quickly as possible - with potential benefits for financing costs, investments and the debt budget.

Diversification takes centre stage again

Against the backdrop of economic and political uncertainty, there is also a clear shift in the market. The share price losses of the "magnificent seven" illustrate how vulnerable a one-sided market concentration can be - a risk that we already addressed in the T&V Letter of the fourth quarter of 2024. Since the beginning of 2025, Nvidia, Alphabet and Tesla have lost between -20% and -37% in CHF terms, while Microsoft, Amazon and Apple have each lost over -13%. Only Meta has remained somewhat more stable at -4 %. The S&P 500 is trading at -6.6 %.

In contrast, other markets are proving more robust: after four challenging years, the Swiss SPI achieved a pleasing performance of around +8 %, while the STOXX Europe 600 is +6 % in CHF terms. This development underlines the fact that diversification remains the most effective protection against cluster risks in an environment characterised by uncertainty. We remain vigilant and continue to focus on long-term substance rather than short-term headlines.

As always, we thank you for the trust you have placed in us!

*This communication is for information purposes only and constitutes neither a personal recommendation nor an independent financial analysis.

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