Category: Market Update

The Dark Side of the Moon

“And if the band you’re in starts playing different tunes, I’ll see you on the dark side of the moon.” – Pink Floyd, ‘Brain Damage’, 1973.

The Artemis II space mission gave us perspective, as the world the astronauts looked down on was in turmoil once again.

Space once appeared chaotic, its elements indeterminable and random, until Sir Isaac Newton tied his theory of gravity together, giving us an understanding of planetary motion. So, it is with US President Donald Trump, whose ideology and strategy are startlingly unclear, but whose motive is beginning to appear through the trail of chaos he leaves in his wake.

The centre of gravity behind his actions in Venezuela and Iran, as well as his rhetoric and actions towards less hostile countries like Greenland, the EU, and the UK, is that he is willing to challenge America’s enemies, and he holds his allies in contempt. The band of nations behind global groups such as NATO, the World Trade Organisation, and the World Health Organisation are being torn apart, or paralysed, by the US policy agenda.

Whether we like it or not, Trump wants the world to dance to his tune, and he certainly has all the instruments at his disposal to achieve this for now.

This marks a major change from the norms of the past thirty years and gives oxygen to Russia and China, amongst others. Making America great again is about strengthening its individual position at the expense of all others, causing the world to fragment.

While this has been the situation for most countries and empires throughout human history, it is one for which Western politicians are highly ill-prepared. The thesis of a global peace dividend is being overruled by the antithesis of individualism and protectionism.

Whichever way the Iran situation unfolds, we are in a new phase of the geopolitical cycle. The world order is changing, bringing a multi-polar world where hard power rules, leading to greater political, economic and market volatility.

The US will continue its extractive approach, taking commodities from Venezuela, Iran, and potentially Greenland, as well as indirect benefits from those able to offer them (a Qatari jet, for example), while extracting indirect reparations from the UK and EU who, in their view, have underinvested in defence, healthcare, and energy security on the assumption that Uncle Sam would pick up the tab.

No one knows how this new world order will play out, but if history is any guide, when new cycles emerge, whilst bringing greater volatility, they also bring opportunity. Opportunity for humankind and opportunity for investors.

Uncertain times: unstable times

“Volatility is not a risk we fear; it is an opportunity we seek.” Howard Marks (23 April 1946 –), Co-Founder and Co-Chairman of Oaktree Capital Management. Author of ‘Mastering the Market Cycle: Getting the odds on your side’.

Think about the major events of the past two decades, and it is easy to conclude that things are bleak – very bleak indeed. The World Trade Centre attack, a banking crisis, Brexit, Covid, trade tariffs, an AI technology crash, the Russia-Ukraine war, and conflict in the Middle East.

Investors have become accustomed to ‘uncertainty’, but that word understates what is uniquely different about this cycle. Uncertainty implies a range of outcomes around a stable centre. What defines today’s backdrop, and the problems of recent years, is something more persistent and far more disruptive: instability.

Instability is not about a single looming risk, including geopolitics, nor a binary outcome; it reflects an environment in which the relationships on which investors rely, between inflation and growth, labour, and consumption, interest rates and markets, are constantly shifting.

That instability, rather than a clear recessionary or boom time signal, is a defining feature of the current cycle.

The message is not that equities are poised for collapse, nor that the path ahead is smooth, but rather that investors are navigating a regime in which stock market leadership rotates more often and returns are dominated by dispersion across sectors, styles, and even companies within the same industry.

Instability also tends to produce higher volatility, not necessarily from crises but from continual repricing of expectations. The clearest example of instability is around inflation, which is still stubbornly above the 2% target.

Complicating matters further is the growing scepticism around the inflation data itself. Methodological changes and a rising share of imputed prices may not materially distort the trend, but they do affect confidence among households, investors, and policymakers alike. Perception matters, especially when inflation psychology is already fragile.

Trade policy adds another layer of instability. Now embedded in the policy framework, higher tariffs act less like one-off price increases and more like permanent step-ups in the cost structure of the economy. This matters for corporate profit margins, consumer prices, and monetary policy.

The labour market tells us a similarly uneven story. Headline employment growth has been positive, yet beneath the surface, there are clear divergences. Large companies continue to hire while small businesses show increasing caution. Wage growth supports consumption, but affordability pressures are increasingly visible.

Economies are not uniformly strong, nor are they uniformly weak. They are uneven, and uneven economies tend to produce uneven market outcomes. For central banks, this creates an uncomfortable policy path – tighten too much and risk hurting the weaker segments of the economy; ease too much and risk reigniting inflationary pressures.

None of this precludes further gains for stock markets. Corporate earnings growth, not macro forecasts, drives markets over time, and corporate profits have been strong. But the nature of these gains will look different from what investors have been accustomed to.

This is relevant in a market still heavily influenced by a narrow set of mega-cap stocks and powerful themes like AI. Innovation matters, but concentration risk does too. Periods of instability have historically favoured diversification, not just as a defensive posture but to capture opportunity across a wider set of outcomes.

One of the mistakes in volatile environments is the search for a single dominant storyline. Is inflation defeated? Is the labour market breaking? Are equities overvalued or unstoppable?

These questions may be emotionally satisfying, but they are analytically limiting. Instability resists clear answers. It rewards flexibility over conviction and process over prediction. It challenges forecasting tools, which often assume stable relationships. That does not mean abandoning discipline. On the contrary, it means anchoring decisions in fundamentals and long-term objectives while accepting that the path ahead will not be smooth.

The takeaway is not a call to retreat from equities, nor a forecast of imminent trouble. It is a reminder that markets can move higher even when conditions feel uncomfortable and that discomfort is often the price of admission for superior longer-term returns. The discipline investors need is about managing exposure, maintaining diversification and resisting the temptation to overreact to every shift in narrative or data.

It is said that stock markets climb a wall of worry; the difference today is that the wall is less a single obstacle and more a constantly moving surface. Navigating it requires balance, patience, and a willingness to live without tidy conclusions – qualities that in markets as in life tend to age well.

‘Fly Me to the Moon’, Frank Sinatra, 1954. The song was the first ever music played on the moon in July 1969.

“One small step for man, one giant leap for mankind.” Neil Armstrong (1930-2012). American astronaut and the first human to walk on the Moon on 20 July 1969.

The Artemis II space mission shows humankind at its most enlightened. The engineering skills involved are sensational, while the mental strength and agility of the astronauts are truly mind-boggling.

What is even more extraordinary is that NASA hopes to have fully operational space stations with humans working on the moon within two years.

Much of the work supporting this mission and future Artemis lunar landings is being carried out by the UK Space Agency and the European Space Agency (ESA), as well as private companies based at Harwell Space Cluster, near Oxford.

Harwell is Europe’s biggest space cluster, with more than 100 space organisations and employs over 1,600 people across myriad projects. It is big business.

Thales Alenia Space is working on the critical propulsion subsystem for ESA’s Argonaut programme, while Nammo Space is creating an engine allowing safe landings on the Moon’s surface.

Harwell is a fascinating place, especially the Diamond Light Source, where it is possible to see star dust particles from a comet some 242 million miles away because of the light beamed from the synchrotron – some 10 billion times brighter than the sun.

And so, even in unstable times, it is worth lifting our gaze away from a world in turmoil. A new space age is gathering pace, carrying with it the familiar spillovers of great exploration, fresh engineering, new industries, and a renewed sense of what is possible. Artificial Intelligence, for all the noise that surrounds it, is beginning to move from promise to practical use in improving productivity. Advancements in medical science continue to extend both the quality and length of human life. Progress has not gone away – it simply arrives now against a louder, more turbulent backdrop.

If human beings can return to the Moon, it is a reminder that the biggest leaps forward are rarely due to the threats of strongmen, but of individual skill compounded by collective endeavour. Even those who thrive on disruption may one day concede that humanity’s enduring achievements are built not by declarations of war, but by countless efforts joined together — patient, spectacular and transformative.

The dark side of the Moon has a brighter side filled with hope, excitement, and promise. In the words of the late Queen Elizabeth II, “Goodness will prevail, and humanity will flourish”.

As always, we thank you for your continued support, and we look forward to updating you regularly throughout 2026.

Please click here to access The Clarion Investment Diary for April with full details of the Clarion Portfolio Funds, including performance statistics.

Keith W Thompson

Clarion Group Chairman

April 2026

Risk Warnings

Any investment performance figures referred to relate to past performance which is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. The value of investments, and the income arising from them, can go down as well as up and is not guaranteed, which means that you may not get back what you invested. Unless indicated otherwise, performance figures are stated in British Pounds. Where performance figures are stated in other currencies, changes in exchange rates may also cause an investment to fluctuate in value.

The content of this article does not constitute financial advice, and you may wish to seek professional advice based on your individual circumstances before making any financial decisions.

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