Teflon Markets: Risks Roll Off

Geopolitical uncertainties, political turmoil in the United States, investigations targeting Fed Chair Powell – and yet equity markets are off to a strong start in 2026. The explanation is simple: as long as the economy is booming, investors pay little attention to political noise.

And the economy truly is running hot. The U.S. economy is growing much faster than expected – despite tariffs and despite the government shutdown. With a forecast of nearly 2.5 percent growth for 2025 and a possible three percent in 2026, America is demonstrating impressive strength. Corporate investment, strong exports, and resilient consumer spending are driving the expansion – and with it, corporate profits.

Germany, by contrast, continues to face structural challenges. Only 0.2 percent growth in 2025, and the manufacturing sector is in its third year of recession. Higher U.S. tariffs are hitting the automotive and machinery industries hard.

How should investors position their portfolios in light of these diverging economic trends? Our analysis highlights what matters now.