From the “end of history” to “history without end”
Michel Saugné, CIO, La Financière de l’Échiquier (LFDE) │June 2025
The world of yesterday, the era of happy globalisation, seems to have come to an end. After the Pax Americana of the 1990s and 2000s, followed by central banks keeping the global economy afloat between 2008 and 2020, we are about to enter a new era. The era of “history without end”: persistent inflation, widespread debt, an ageing population and a decline in the labour force, a return to borders and protectionism, an uncertain energy transition, the triumph of artificial intelligence, exacerbated geopolitical tensions… and the extreme polarisation of society.
In this constantly changing environment, financial markets are seeking new indicators. The first half of 2025 has been dominated by the strong economic and market resurgence of Europe and emerging countries. Driven by ambitious stimulus plans (particularly in Germany), a more reasonable value premium and the clear outperformance of Value styles and domestic stocks, the eurozone was able to regain prominence in portfolio allocations. In contrast, the United States has been caught between stretched valuations, growing fiscal imbalances and greater political uncertainty since the return of the Trump administration. If “Big Tech” continues its unwavering support of US indices, the disparity between performances will remain substantial and the risk of a new correction cannot be ruled out.
Let’s face it: technology is no longer just another sector. From the 1990s up to today, and thanks to three successive revolutions (the internet, social media and AI), it has become the backbone of modern societies and economies. Tech, reigning supreme, now permeates all the vital functions of our economies, including corporate life, healthcare, education, information, energy transition, politics, security and defence. And mastering it is now a prerequisite for political and economic autonomy. Europe, although often perceived as being behind, has a deep, strategic technological foundation, able to compete in critical segments. However, it is still necessary to identify the right players, support them… and invest capital wisely.
Beyond tech, multiple investment themes are now emerging as medium to long-term opportunities. European small and mid-cap companies, long overlooked, are bouncing back and improving their performances – discounted valuations, embedded earnings growth, domestic exposure coupled with massive European stimulus plans. Then there is the defence sector, which benefits from unprecedented political support in a rapidly rearming world: the example of Rheinmetall demonstrates the extent to which geopolitics can be a powerful market driver. And, in the same vein as “Shanghai, Mumbai, Dubai or Goodbye” – a famous quote from the 2000s and a potential vision of the future for the financial markets – emerging markets may finally be able to exit the twenty-year tunnel of underperformance, buoyed by the weakness of the dollar, lower energy bills and a gradual reallocation of global flows. The big question remains the US.
Between exaggerations being flung left and right, (geo)political and fiscal uncertainties and consumer pressure, the retail bull market could be tested again, even if the notorious
“TACO trade[1]“ has so far helped to avoid a lasting correction.
In a world that is once again multipolar and unbalanced but rich in opportunities, investors need to be discerning, responsive… and attentive. Because even if history never truly repeats, it often stutters. It is up to us, as asset managers, to make the best of it.