Hostages to misfortune
Consider this statement from the CEO of French utility Engie, which announced record profits at the end of February 2025. Declaring that “you need to know the rules”, CEO Catherine MacGregor warned that Engie could divert investment away from the US if there is no clarity and predictability on policy. That result announcement led Engie’s share price to jump to a record high – exactly the kind of equity boost that was powering returns for investors in the balmy days of 2024. Equity returns from the US are now far less predictable – for precisely the reasons that McGregor instanced.
The issue is not so much the policies themselves, but rather the inconsistency and capriciousness of policymaking. The back-and-forth on tariffs has hardly done much to reinforce the credibility of the policy. Nor did the jump in stocks on Monday March 24 when news broke that the Trump administration may not introduce as many nor as harsh tariffs in April as promised. The sharp drop in the NASDAQ composite from over 20,000 in late February to below 18,000 just a couple of weeks later has recovered somewhat – but not markedly.
Reporting on comments by the Federal Open Market Committee Torsten Slok, chief economist at Apollo Global Management, wrote that “the Fed is worried that the ongoing stagflation shock is going to intensify further” then. Note that word “ongoing”. Stagflation has not troubled the West conspicuously since the 1970s. And the Wikipedia article on the topic, however simplistic, states that “the government can cause stagflation if it creates policies that harm industry”. All this has happened in just a few short months since 2024 ended on what most commentators saw as a great period for US productivity and economic strength.
Some industry groups are already starting to push back. The American Farm Bureau has already warned that the Trump administration’s plans to impose huge fees on China-linked ships in a bid to revive US shipbuilding could seriously damage US farm exports. Shipping and coal industry lobbyists have echoed the protests.
Perhaps it’s time that institutions took a similar stand. After all, their interests are just as much at stake. Institutional investors, and above all pension funds, are fiduciaries. They have a legal, enforceable responsibility to act in the interests of their stakeholders. And the just-released Cerulli Report – US Retail Investor Solutions 2025 – found that 70% of affluent investors believe that financial services providers are obligated to always put the best interests of clients first. Fiduciaries are compelled, unlike politicians, to make decisions based on fact. And the consequences to them if they fail to exercise their fiduciary responsibilities are likely to be more immediate and more lasting than simply losing an election.
Their views ought to carry commensurate weight. After all, they handle vast amounts of money. They represent their stakeholders. And they should speak up and be heard.