As Switzerland prepares to host the UEFA Women’s Championship, beginning July 2, the country should be buzzing with excitement. The national team, led by Swedish coach Pia Sundhage, will kick off the tournament against Norway this Wednesday at 9 p.m. local time. However, the usual sense of celebration is overshadowed by growing geopolitical tensions, which make the world feel increasingly fragile.

Recent developments—particularly in Iran and the Middle East—have brought back uncomfortable memories. The U.S. military’s intervention raised fears that we might be inching toward a larger-scale conflict. For a brief moment, it almost felt as if the world was on the verge of a global war. But despite the severity of the news, financial markets hardly blinked. Equities remain buoyant, and investor appetite seems undisturbed. Once again, markets appear to be brushing off geopolitical risk and betting on brighter days ahead.

This mismatch between global uncertainty and market behavior is what we call complacency.

A Growing Disconnect: Optimism in the Markets, Doubt on the Ground

Inflation has been one of the most closely followed economic indicators in recent years. In May, we saw the European Union's inflation rate drop to 1.9%, while the U.S. experienced a slight increase to 2.4%. Both numbers are relatively close to their central banks’ targets. Switzerland, however, stands out: Inflation in May was negative 0.1%, with a growing risk of deflation. As a result, the Swiss National Bank (SNB) recently cut its interest rate back to zero.

At first glance, these developments might seem encouraging. After all, inflation appears under control. However, what’s happening beneath the surface tells a different story. In the U.S., consumer confidence fell from 98.4 to 93 in June.

Even more striking is the University of Michigan’s consumer sentiment index, which has dropped 29% over the first four months of 2025. According to Joanne Hsu, the Director of the Surveys of Consumers, such sharp declines are historically associated with recessions.

In the European Union, consumer sentiment held relatively steady, with only a minor 0.3-point decline. Switzerland, after a steep drop in April, has seen a slight recovery in sentiment. Yet, despite this pessimism, consumer spending in Switzerland has not contracted significantly. People are anxious—but they’re still spending.

Investors: The Eternal Optimists

On the investment side, optimism continues to rule the day. Markets are pricing in recovery even as the underlying data remains mixed. U.S. GDP for the first quarter was revised down to -0.5% quarter-on-quarter, from a previous estimate of -0.2%. In contrast, Germany’s GDP was revised upward from 0.2% to 0.4%, offering a small but meaningful signal of recovery.

This shift reflects something we’ve long observed at WHVP: Germany appears to be climbing out of a recession, while the U.S. may be heading into one. Supporting this view is the German government’s recent EUR 500 billion stimulus package. While such a measure won’t magically fix the economy, it can create enough momentum to support modest growth going forward.

In Switzerland, real GDP growth came in at 0.5% for Q1 2025, slightly lower than the previously estimated 0.7%. Full-year GDP growth is expected to reach 1.3%. The U.S., facing reduced trade and domestic uncertainties, is also projected to grow around 1.5%. Germany, after near-zero growth this year, is forecasted to pick up modestly with 0.7% and 1.2% in 2026 and 2027. The broader EU outlook is similarly muted, with a forecast of 1.1% growth for 2025.

However, forecasts are just that—forecasts. They shift with the political and economic winds. What matters more is how investors respond to the data. So far, they’ve largely chosen to look beyond the headlines, positioning themselves for a recovery that may or may not arrive on schedule.

The U.S. Dollar and Tariff Troubles

Turning to currency markets, the U.S. dollar has had a rough year. Measured by the DXY Index, it is down 10.46% year-to-date, and even more against the Swiss franc—down 11.56%. The decline accelerated following the announcement of new tariffs on April 2 and has only slightly rebounded shortly after President Trump postponed the implementation for 90 days.

This grace period expires on July 9, and the outcome remains uncertain. While we suspect another delay or a scaled-down version of the tariffs may be agreed upon, the damage to confidence has already been done. If tariffs are introduced alongside a weakened dollar, the result could be a double blow to American consumers: rising prices and reduced purchasing power.

While reshoring production back to the U.S. may sound appealing politically, it’s not a silver bullet. Smart business leaders look for sustainable, long-term profitability—not short-term policy wins. Even if the proposed “One Big Beautiful Bill Act” is passed, we believe it could eventually lead to higher taxes and broader economic trade-offs.

Our view is clear: Don’t let short-term political theater distract you from long-term strategy. Ask yourself whether current policies are likely to produce lasting investment opportunities—or if they are simply noise.

A Testament to True Diversification

This year has offered a compelling real-world case study in the value of international diversification. European markets—and Swiss equities in particular—have significantly outperformed their U.S. counterparts, reaffirming a trend we observed during the 2008 Financial Crisis and its aftermath. Just as then, investors who broadened their geographic exposure have benefited from more stable returns and a reduced correlation to U.S.-centric risks. Swiss financial markets have not only remained resilient amid global uncertainties but have also gained ground as the Swiss franc continues to appreciate against the U.S. dollar. This decoupling has reinforced the strategic rationale behind our exclusion of U.S. assets: It’s not about turning away from opportunities, but rather about protecting and preserving wealth through true global diversification. At the same time, we’ve seen a noticeable increase in interest from American clients seeking refuge from growing political uncertainty, concerns over fiscal irresponsibility, and an administration that has openly embraced a weaker dollar policy. In a world where domestic safeguards are increasingly politicized, the stability, neutrality, and long-standing investor protections of Switzerland have never looked more attractive.

Low Rates, Big Risks

After the Fed stayed firm, on June 19, the Swiss National Bank dropped interest rates back to zero, responding to a 0.1% decline in inflation during May. Switzerland now finds itself battling deflationary pressures while managing a strong currency. In contrast, the U.S. Federal Reserve is facing uncertainty around how tariffs might affect prices.

Some economists argue that inflation is not just about rising prices but about the amount of money in circulation—what’s known as M2. If tariffs make certain goods more expensive, but the money supply remains constant, consumers may just cut back elsewhere, leaving overall inflation unchanged.

But if central banks increase the money supply to offset this effect, we could see inflation accelerate again.

The broader concern here is how low interest rates affect the quality of investment decisions. With yields compressed, especially in the fixed-income space, investors may be tempted to accept too much risk for too little reward. In Switzerland, some government bonds now carry negative yields, meaning investors are guaranteed to lose money unless the currency appreciates significantly.

With the European Central Bank continuing to cut rates, and the Fed likely to follow suit—especially after Jerome Powell’s term ends in May 2026—this environment may persist for some time.

The big question remains: If another recession hits, how much room will central banks have to respond? The logical conclusion would be a return to quantitative easing—flooding markets with liquidity. It worked before. But will it work again?

Where to go from here?

Historically, when central banks expand their balance sheets, investors often flock to precious metals. But this doesn’t always happen in the way one might expect. After the 2008 financial crisis, gold surged—until 2011. Then it took seven years for the price to reach a new all-time high. Silver still hasn’t fully recovered.

On the other hand, in 2021, as inflation rose, many questioned whether gold was still an effective hedge towards inflation. Yet those who remained patient have been rewarded.

Today, gold is experiencing a renewed upswing, and the trend may continue. But if it doesn’t, there are still opportunities. Capital doesn't like sitting idle. If not in gold, then perhaps in equities—or in other real assets.

The key takeaway: Diversify thoughtfully. Don’t chase trends. Stay invested, but with a strategy rooted in long-term thinking.

Final Thoughts: The Value of Perspective

Economic cycles come and go. Political instability rises and falls. Markets fluctuate. But through it all, history has shown us one constant: People figure it out.

Yes, there will be periods of pain and uncertainty. But there will also be innovation, resilience, and growth. Those who succeed over the long term are not the ones who panic during downturns—they are the ones who prepare, diversify, and act with discipline.

At WHVP, we help our clients navigate uncertainty through international diversification, preservation-focused strategies, and a deep understanding of global markets. Switzerland’s stability, regulatory strength, and tradition of investor protection provide a solid foundation in times like these.

Let others be complacent. We prefer to stay focused—on the risks and the opportunities.

If you’d like to discuss how WHVP can support your long-term financial strategy, we invite you to schedule a free consultation. Let’s explore how an international perspective can support your peace of mind.