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US trade policy is shaking the foundations of the global economic order. After a brief period of easing due to market pressure, the United States is once again using tariff threats as a deliberate tool to extort concessions – and the rest of the world is backing down. “WACO – The World Always Chickens Out” captures the current geopolitical mood. What this means for investors is explained by Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM: “Markets are more political than ever – those who fail to recognise this risk missing a fundamental shift.”

Just as Germans refer to a coward as a "scaredy-cat", Americans speak of a "chicken". In April, the term was on everyone's lips in the global financial markets. After US President Donald Trump announced sweeping tariffs, markets were rocked: stock exchanges tumbled temporarily, and the US dollar lost significant value. Trump initially appeared to backtrack, suspending the tariffs and signalling a willingness to negotiate. The phrase “TACO” quickly made the rounds – Trump Always Chickens Out.

But this hope proved deceptive. The US administration has since extracted significant concessions from other nations using tariff threats. The new term is now “WACO” – The World Always Chickens Out – symbolising a shift in the geopolitical and economic landscape: the world is yielding to Trump. Other countries are no longer seen as equal trading partners. Consensus has been replaced by power plays and brute coercion.

This has far-reaching consequences for the equity markets. “US-based companies with strong domestic market focus – such as utilities, telecommunications, and infrastructure – benefit structurally, as they are less exposed to international retaliation,” explains Fischer. Conversely, international export sectors in Europe, Japan, and emerging markets are coming under pressure. In the long term, multinational corporations may prefer the US as a base to shield themselves from external uncertainty. The main losers are emerging markets, which are seeing capital outflows – with the exception of China.

Bond markets and currencies are also affected. “The US’s position as a safe haven for capital is being reinforced,” says Fischer. “US Treasury bonds may once again become a refuge in uncertain times.” For smaller trading nations, risk premiums are rising, making refinancing more expensive. At the same time, the US dollar remains at the heart of global finance. Those who don’t oppose the US tacitly accept the dollar as a tool of discipline. “In the long run, however,” Fischer warns, “this approach could undermine confidence in the dollar as the world’s leading currency.” The search for alternatives to the US currency is gaining momentum, and uncertainty is growing.

At the same time, there is a flight to other supposedly safe havens: geopolitical and monetary uncertainty is pushing the gold price to record highs, with central banks and private investors worldwide building up significant reserves. Cryptocurrencies such as Bitcoin are also gaining appeal as ideological countermodels to a politicised global financial system – even if they remain volatile in the short term.

So what should investors focus on now? “Emerging markets are not all the same,” says Fischer. “Resource-rich, politically stable economies may remain attractive, while others will suffer.” Industrial export nations remain structurally under pressure. Overall, portfolios now require more than classic diversification: geopolitical resilience is key – with a focus on the US, gold, strategic commodities, and selective emerging market investments. “In the WACO era, the global economic and financial system has become a political playing field,” Fischer concludes. “Those who only look at data, balance sheets, and yield curves will miss the real turning point. Political risk competence is becoming a decisive competitive factor for investors.”