Over the past several weeks, we’ve seen renewed volatility in the markets. Many of you have asked what’s driving these swings—and more importantly, what it all means for the future. We wanted to offer some perspective on the larger strategy unfolding behind the headlines.
While news coverage often portrays current U.S. policy as erratic, we are starting to see signs of an organized plan that might be at the core of recent announcements from the White House.
What’s Happening?
The Trump administration appears to be pursuing a long-term reset of how America:
- Raises revenue (especially from abroad)
- Trades with other countries
- Provides military protection
- Engages with global institutions
We don’t see this pursuit by the administration as a tweaking around the edges. It’s a full-scale shift—what some are informally calling the “Mar-a-Lago Accords.”
Let’s break it down simply:
1. Asking Allies to Pay More
The U.S. spends heavily to protect other countries—through NATO and global military presence. The plan now is to ask allies to shoulder more of those costs. Countries like Poland, Germany, and Spain are already increasing their defense budgets.
Why this matters:
If allies pay more for defense, the U.S. can reduce its own spending and borrow less. That helps shrink the deficit and softens the dollar, making American exports more competitive.
2. Tariffs Are Strategic Tools
You’ve likely seen headlines about tariffs, especially on Chinese goods. These aren’t random or just political—they’re being used to:
- Collect revenue from foreign businesses
- Pressure the U.S. dollar downward
- Act as leverage in broader negotiations (not just about trade, but about defense and capital flows too)
It is also possible that the U.S. will use the reciprocal tariffs to build a coalition of “friendly” economies to influence China’s global trade policies.
3. Building a U.S. Sovereign Wealth Fund
In February, the administration signed an executive order to begin forming a U.S. Sovereign Wealth Fund. This could include revalued gold, seized digital assets like Bitcoin, and potentially even federal land.
The goal?
To create a national balance sheet that can be monetized—not to back the dollar, but to reduce reliance on foreign debt. There are many sovereign wealth funds that exist today. Saudi Arabia offers an excellent example of how a nation with an imbalance of production and demand can use the Fund as a counterbalance.
4. Changing the Role of the IMF and World Bank
The U.S. is also pushing global financial institutions like the IMF to shift back to their core missions—particularly by challenging nations like China to stop saving excessively and start consuming more.
This move encourages a global re-balancing:
Surplus nations should rely more on their own demand—so the U.S. no longer needs to act as the world’s buyer of last resort. This is true of the U.S. and helps explain the administrations push to onshore the production of goods consumed in the U.S.
The U.S. economy is built on consumption. However, the tradeoff to such a focus is a shift in supply to foreign economies. It seems to us that the Trump administration wants to pressure global institutions like the IMF and World Bank in a way as to bring consumption and production into balance.
5. Softening the Dollar
Over the past 40 years, the strong dollar has made U.S. exports more expensive and hurt domestic manufacturing. The plan now is to gradually ease that pressure by:
- Reducing U.S. borrowing abroad
- Issuing longer-term bonds
- Letting the dollar soften to support American industry
This strategy finds its roots in the “Plaza Accord” of 1985. At the time, this plan was put together by a U.S.-led coalition of major western economies to devalue the U.S. Dollar. A weaker dollar lessens the cost of our national debt and decreases the cost of domestic goods on the global market.
So Why All the Uncertainty?
This plan is still being negotiated on many fronts—with countries, institutions, and markets. That’s why we hear very little publicly. There is little doubt in our mind that the wheels of diplomacy are turning fast to crystallize their plan.
We believe this is what’s driving much of today’s market movement. It may not be as random or chaotic as many might think. We are seeing signs of a long-term plan taking shape. We have no comment on the prospects of success for such an ambitious plan. Rather, we simply work to understand what might be behind the headlines.
What This Means for Investors
Markets don’t like uncertainty, and transitions like these come with volatility. But they can also create opportunity. As always, we’re focused on navigating this environment carefully—balancing risk, keeping an eye on long-term trends, and staying disciplined in our strategy.
We’ll continue to watch developments closely and keep you informed. If you’d like to discuss how this fits into your portfolio or long-term goals, we’re always here to talk.
A Note on Perspective:
The ideas shared in this letter reflect a composite of insights from prominent economic thinkers and strategists. They are not an endorsement of any political figure or party. Our goal is not to express political opinions, but to better understand how evolving policies—regardless of who proposes them—may affect the financial markets. That understanding helps us make informed decisions and position your portfolio for long-term success.
Sincerely,
Kessler Investment Group, LLC
All information in this presentation is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. Certain statements contained within are forward looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Please consult your adviser for further information.
Opinions shared in this presentation are not intended to provide specific advice and should not be construed as recommendations for any individual. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk.