2026 has got off to a flying start. As I write this to you, we find ourselves moving into March, and if we thought that the new year would bring clarity to what has been a volatile and confusing world, we were sadly mistaken.

At the time of writing, there are numerous areas of uncertainty both locally and abroad:

• We are seeing the biggest build up of US military resources since the Iraq war, around Iran. It is difficult to believe that the US would go to all this trouble just for show. 
• Trumps tariffs were struck down in the US Supreme court. Or were they? The current guise of the Tariffs has been through the use of the International Emergency Economic Powers Act (IEEPA), which the Supreme Court Ruled against. Trump immediately signed a proclamation using an alternative law, Section 122 of 1974's Trade Act to reinstate certain tariffs. Confused yet? And the Supreme Court was mute on how previously levied tariffs would be reimbursed. 
• US midterms are coming and early polling indicates that the Democrats are on the rise. This will have an impact on the US landscape and potentially markets.
• What AI means to the world remains anyone’s guess. Will it render professions and industries obsolete and make humans redundant (it is difficult to believe that things will end well if the human race has no purpose and huge amounts of time on its hands), or will it unlock productivity gains that propel the next wave of human ingenuity, much the same as the printing press, combustion engine, or the internet didn’t represent a death knell of industries but rather the birth of new ones.
• Markets seem unconcerned by valuations and the risk of an AI bubble – despite warnings and extended valuations we have yet to see material pull backs or volatility in global equity markets. Is this the tech boom and bust (and boom) all over again?
• As much as we saw the dotcom collapse in the early 2000’s, it is undeniable that today’s global titans are tech companies, some of which didn’t even exist when the crash happened. It is probable that we will see the same in the AI space.
• Debt levels the world over continue to rise, yet this elephant in the room continues to be ignored

On the South African side of things we are seeing a welcome tail wind from a resurgent Rand and a strong JSE. Undoubtedly, there are some green shoots to be seen in South Africa. We are off the grey list, electricity supply is less of an issue (although the pricing thereof remains challenging), inflation is under control, we have seen some positive developments with ports and Transnet, and we are likely to see enhanced tax revenue on the back of high resource prices and consequently a less pressured budget. A massive infrastructure project is set to be unleashed (cynically one can’t help fearing that this will just be another feeding trough for the corruption that has crippled our country).

That said, we need to be careful of assuming that these tail winds are of our own doing and that they are sustainable.

Much of the strength of the ZAR has to do with the unprecedented weakness of the USD, and much of the strength of the JSE is as a result of higher gold and platinum prices and resurgence of the Chinese stock market (which influences the value of Naspers through its holding in Tencent). We have also seen a dearth of volatility in global markets in the last 10 months – we shouldn’t forget though, that when we saw meaningful volatility in April of last year, the ZAR nearly touched R20/USD. SA has yet to solve its anaemic growth challenge – much of which can be attributed to the government doggedly sticking to (and even doubling down) on policies which clearly haven’t worked. Add to this the upcoming succession challenges that the ANC and consequently South Africa faces, and it is not possible to claim that South Africa is out of the woods.

And then we have the US.

Whatever one’s views on President Trump are, one thing that is not controversial is that he is a divisive character, and it seems the world and markets have got to a position of seeing the US in binary terms – very good or very bad.

Currently there seems to be a huge level of pessimism on the US and the Dollar, and much of this is linked to a single personality. Perhaps this is deserved – his approach of being an (unpredictable) iron fist without a velvet glove has resulted in markets playing the man, and not the ball, so to speak. If one looks at the US, is it as bad as is being made out? Economic growth is strong (materially higher than Europe or the UK), inflation is virtually back at target, interest rates have fallen, democratic institutions have stood up to political pressure (think the FED on interest rates and recent supreme court rulings), and employment is solid (there has been job shedding in the federal workforce but the private sector has seen good numbers). And more importantly, the US economy is at the cutting edge of the technical and AI revolution that we are seeing. Love him or hate, Trump will be constrained by the mid-term elections and gone in under 3 years. It is entirely possible that we are at the point of maximum pessimism on the dollar, and we should be careful of being too quick to bet on its demise. It could be a costly mistake.

Perhaps the divided nature of where the world finds itself has lead to binary positioning, and this is exactly what we should avoid.

Perhaps the divided nature of where the world finds itself has lead to binary positioning, and this is exactly what we should avoid. Whether it is asset class positioning, stock selection, or geographical allocation and currency exposure, nuance and diversification will be key.