As CEO of Market Securities Monaco SAM, an independent broker with a global presence, Christophe Barraud offers a wide range of multi-asset execution and advisory solutions to institutional clients. He breaks down the major macroeconomic trends currently underway for us. Geopolitical fragmentation, the impact on global inflation, key technology sectors and investment strategies: he provides a clear and precise view of the current economic situation and the medium-term outlook.
Is the US-China rivalry permanently reshaping global supply chains? Which regions do you think will benefit the most?
Yes, we are already starting to see this. China knows that trade disputes with the US are here to stay; this is not just a short-term issue. With Trump, it will be even more violent and volatile. Today, China is applying the strategy it put in place in 2018-2019: going through “proxy” countries such as Vietnam. This can be seen in recent figures. These countries, which then re-export to the US, benefit because they take a commission in the process. But Trump could put pressure on them to limit this transshipment.
At the same time, China is also seeking to gain market share elsewhere, particularly in Europe. In May, its exports to the EU and the UK accelerated while they fell to the US. It is offering very aggressive discounts to penetrate these markets, which is hurting European manufacturing. This will also have an additional deflationary impact on Europe, as China is already exporting deflation and is intensifying this effect to gain market share. In my opinion, these are two key macroeconomic issues to watch over the next six months.
Is Europe the weak link between China and the US?
To some extent, yes. Faced with the US, Europe will be forced to make concessions if it wants to avoid 50% tariffs from July 9. The German automotive sector is already directly targeted by the tariffs introduced in April, which will hurt the German economy in the second and third quarters. That said, this has forced Germany to react quickly with a stimulus package and tax cuts worth $46 billion. This is a necessary response, but it also reveals a certain weakness. With regard to China, Europe may also need to impose tariffs to protect its industry. For now, this is not the path chosen. But Trump could pressure Europe to impose them on China. This is possible in the coming months.
Can we imagine a “deus ex machina” not included in market expectations for the second half of 2025?
One possible scenario would be increased pressure from Trump on Europe to tax China more heavily. In general, Trump will continue to put pressure on all his partners. He is already asking Vietnam to tax China to prevent Chinese goods from transiting through these countries. We have seen the same pattern with Russian and Iranian oil: goods always find a way, but they cost more when they arrive.
Today, the US is importing inflation via tariffs on China, while the rest of the world is importing Chinese deflation, which could create a divergence in monetary policies. This is also why inflation expectations are pointing to an acceleration in the US in the coming months, while they are fairly stable elsewhere. Powell reiterated this again last week.
Uncertainty will continue to surround tariffs. It is impossible to finalize treaties in three months; the average is closer to 18 months. So even if compromises are announced, there is a strong chance that the pause on global tariffs will be extended by 90 days to allow time to deal with 150 countries.
We will also need to monitor the impact on the pharmaceutical and semiconductor sectors, which will certainly be targeted. The markets are still underestimating the volatility ahead.
What technological innovations or transformations could have a major macro impact between now and 2030?
Several sectors are attracting private and public investment. Semiconductors and artificial intelligence are key areas. AI is advancing rapidly, although it is still a long way from producing reliable predictions on complex tasks. Electric vehicles also remain a major theme, as there is no large-scale substitute for them at present.
Robotics and automation, particularly in logistics, will continue to grow strongly. Defense is another key sector, with drones as a central pillar. The arms race and defense research are being revived everywhere: the US, Europe, and Asia. This is a structural change that will last at least five years.
In Asia, China is investing heavily in AI, which is further globalizing the semiconductor theme. In the automotive industry, these components are becoming dominant. This is therefore a fundamental trend, despite periods of volatility linked to restrictions or strategic reorientations.
Which sectors are currently attracting the attention of institutional investors, sometimes beyond the actual fundamentals?
Semiconductors remain a leading, cyclical indicator and currently dominate thanks to the weight of the largest US capitalizations. One sector benefiting from a “psychological bias” is luxury goods: despite unfavorable short-term fundamentals for discretionary consumption, there is a constant reallocation towards this sector. But overall, I don't see any other major biases in the short term.
If you were the manager of a large European fund, what would your strategic priorities be?
Today, we are reallocating towards the US, as tax cuts are on the way and financial deregulation is beginning, which favors US performance.
If I had to stick to Europe, I would play the real estate sector in the short term, which is benefiting from lower short-term interest rates and underlying inflation returning to normal. Germany would be my preferred region, as it has understood the seriousness of its situation and is responding with fiscal stimulus and tax cuts, with plenty of room for maneuver.
I would also favor defense, despite the sector's high valuations, as it is attracting steady inflows with the creation of specialized funds. Finally, I would keep an eye on discretionary consumption, which is currently being battered. A rebound could occur later in the year, particularly if European and Chinese growth picks up and trade agreements with the US reassure the markets.
