The divide between the fortunate aggressor, and the so-called middle powers, or spectators, between those with strategic foresight and the price takers, is stark.
The year’s early exuberance in Europe and the UK has gone, reverting to the old confused, undervalued tangle, fearful of rate rises.
And what is Hillbilly Elegy?
New all-time highs ring out for the NASDAQ and S&P, as US investors suddenly recall there are worse things than being ruled by a blowhard with a big army (like a blowhard with no army). Time to refocus on a vast market, new trade protections, energy security.
The UK market has been hit.
The index damage is less visible because of the resource stocks, but there is plenty of gloom. The danger of rate rises in either the UK or the US feels overstated, in part because of the damage it would do, to already fragile labour and housing markets. We are still part way through the post-COVID rate cuts. I am less sure others have that cushion, notably Europe, with rates already low.
But some damage has been done.
NatWest – a Marker?
I have been looking at Nat West, very much, now, a UK bank. Its shares have done well, up nearly 200% in five years, up 21% in a year, but then down 11% in the last three months. Results have been good, a rising dividend, a falling share count (from buy backs) and growing earnings per share. One of the rare UK stocks where the 2025 performance exceeded my expectations, and caused a solid mark up in long term value.
So why the recent fall? I do not believe it had been overvalued at £7.00. The return of positive interest rates, post-COVID, transformed it, while higher for longer has also helped. That benefit should persist.
While loan losses, the Achilles heel of so many banks, look fine. Residential mortgages dominate, thanks to the zealous regulator, with plenty of safety margin, and real security. Overall, the dour management, as they shook off the final vestiges of state ownership, provided little growth, but plenty of safety.
From: This website– (extracted on 25-4-2026)
So why the 11% price fall to £5.80? There has been a general retreat from the UK market, as bond yields rise. They also splurged nearly £3 billion on buying a wealth manager from private equity. I see little sign of any inherent skill in wealth management, outside of Coutts, the private bank, which remains a small part of the whole. The market would prefer more buy backs.
Markets don’t like the Gloom
Then there is the UK despondency, like the old Nat West CEO, slow and steady looks like being blown up by hyperventilating journalists.
Whatever your view of Starmer, if he goes without an election, what follows will be worse for the UK economy. So, if he is yet another decent guy, turned into a fallible monster by entering Downing Street, we are doomed to repeat the error of changing the idiot, not the idiot system.
Markets do not fancy that. He has messed it up, by having a remarkably tin ear and loose tongue, but will any other Labour MP do better? Seems unlikely.
There is a bit of growth in the UK, and with an engaged government, it might work out OK. The damage done to Starmer by Mandelson need not be fatal, but markets are no longer that sure they want to hang about to find out.
J D Vance and Hillbilly Elegy
What of JD and the Hillbillies? A remarkable memoir, and nothing like I expected. If you feel compelled to have a view on the man, you should read it. For your safety I can assure you it predates Trump, indeed despite his own youth (1984 vintage) the book is already ten years old.
It is a great deal shorter than the Nat West accounts, (272 against 432 pages) far more readable, and neither boring nor dishonest, so given my recent reading, wins on all counts.
Nor is it, oddly, political. Even the Hillbilly bit is true, the Southern Appalachians, in Kentucky. Nor is there much in the way of economics, largely it’s a cultural story, as I guess any good lawyer could provide.
If it has a theme, it is agency. You make your own luck. While he professes luck it is, trying and failing is what matters most. In the end like a log in a river, you will fetch up on a sandy beach, if you don’t sink.
He is not convinced the state always helps, it is too prescriptive, too quick to dole out money, too quick to become set in its ways. That drugs (and drink) destroyed his family arouses little anger at the suppliers of either. That jobs left Kentucky because of imported steel, does not arouse much scorn.
Nor does the Ohio town he moved to seem much better, although clearly it is. Nor does Ohio State University get much praise, or indeed a tour in Iraq, with the 2nd Marine Aircraft Wing, although he quite likes the impact of the Marine Corps training.
Yale Law School gets praise, but mainly for the girl he worked with on his very first assignment (and then married), and the life choices it created.
He gives a good chronicle of the double decay in private sector jobs and public services, that destroys many places. A key issue.
I can understand why Trump needed him, to deliver the rust belt to a New York property developer, I can see where his votes came from. In a finely divided country, the hollowed centre is often up for grabs, so it matters.
His policy delivery has been focussed on understanding the poor of middle America, in a way neither fans of globalisation and coastal politicians, like Biden and Harris, could ever credibly offer.
That to do this means working with Trump, matters less. He seems, to his boots, an outcomes guy. You don’t pick your squad, you don’t pick your battles, but you do influence how they end.