Trump's 'Chaotic' Policies May Drive Investors To Europe, Says Analyst: 'Quite A Shift In The World Order'

Namrata Sen

March 10, 2025

Benzinga

The unpredictable policies of President Donald Trump, especially concerning tariffs and the Russia-Ukraine conflict, have stirred a sense of uncertainty among households, businesses, and Wall Street. However, this has also paved the way for new investment opportunities, as per analysts.

What Happened: The erratic trade tactics of the Trump administration have recently led to U.S. stocks facing their toughest week of the year. Despite this, Mike Cudzil, a portfolio manager at Pimco, sees this uncertain backdrop as a breeding ground for investment opportunities, reported MarketWatch. He highlighted a significant shift out of Europe, particularly Germany, in anticipation of a massive fiscal package expected from Europe next week.

"What you are seeing is a repricing of risky assets in the U.S. relative to risky assets [abroad]," the portfolio manager told the publication.

It's potentially "quite a shift in the world order" compared to the past 80 years, Cudzil added.

Friedrich Merz, likely to be Germany’s next chancellor, has pledged a massive increase in defense spending and proposed a €500 billion ($524 billion) investment in infrastructure. Cudzil attributes this potential shift to the “chaotic” U.S. policies that have prompted Europe to reconsider its defense spending. Even Goldman Sachs, researchers predict a substantial rise in defense expenditures by EU member states through 2027.

Meanwhile, the Chief Investment Officer at Spectrum Wealth Management, Leslie Thompson, also sees potential for profit in overseas investments. She also stated that her team has started moving some profit into exchange-traded funds focused on stocks in developed foreign markets.

Why It Matters: The economic landscape has been marked by uncertainty due to the unpredictable nature of Trump’s policies. This has led to a shift in investment strategies, with a focus on overseas markets, particularly Europe.

Investors have recently poured $12 billion into European stocks, marking their strongest inflows in a decade. This indicates how European government stimulus could strengthen the Eurozone while the Trump administration reworks its trade agreements and aims to significantly reduce the federal government.

As noted by economist Mohamed El-Erian in a podcast with Forward Guidance, the risk of an economic slowdown is a significant concern. However, the current economic climate also presents opportunities for savvy investors who are willing to venture into foreign markets.

The S&P 500 (NYSE:SPY) dropped 3.32% over the last five days to close at 5,770.20 on Friday, while the STOXX Europe 600 climbed 8.46% to reach 551.00.