Why a Trumpian world could be good for trend

Trump’s U-turns have hit returns, but the forces that put him in office could revive the investment strategy

Key points Summary Q&A

• Trend following funds had a poor first half; Trump’s ‘Liberation Day’ tariffs and rapid reversal triggered a sharp sell-off and rebound, making April one of their worst months.
• Yet managers say the politics of deglobalisation will create more diverse trends, with new trade blocs and divergences in growth, rates and currencies.
• Crabel’s Grant Jaffarian sees potential for a “gangbuster” 2026, with clear trends from energy, geopolitics and AI, echoing 2000–09 when SocGen’s trend index nearly doubled.
• Early signals stand out: the dollar had its steepest first-half fall since the 1970s and gold and silver rallied; Jaffarian says cuts could make rates a tailwind, while Florin Court’s Doug Greenig flags an unusually unstable macro backdrop.

These summaries are generated by an LLM, but edited by humans.

President Donald Trump seems an obvious person to blame for trend following’s dismal first half this year. The market fall and recovery caused by his ‘Liberation Day’ tariffs and their subsequent reversal led in April to one of the worst months for the sector in memory.

And yet trend followers are upbeat about what Trump and Trumpism will mean going forward.

To be precise, the social and political flux that Trump reflects – and to which the US president often contributes – makes trend followers optimistic about the future of their investing approach.

This seems odd at first blush. Trend following is predicated on the idea that markets take time to price new information. When the world changes, prices trend gradually to a new equilibrium rather than jump there instantaneously. Trend followers look for the early signs of those moves, pick up on the emerging trend and hope to benefit as it gathers momentum.

Trump’s course reversals have presented a clear problem for the strategy. Surprises are trend following’s Achilles heel. And Trump, as we know, uses surprises as a negotiating tool. Some in the industry have called the US president the markets’ “PC1” – referring here to a statistical measure of the main driver of volatility.

There are probably more reasons to believe the old-world regime for trend will return rather than a new one in which trend does nothing but flatten or lose you money

Grant Jaffarian, Crabel

While that’s true, trend followers point out that politics can also reflect and create trends as much as break them.

In this view, Trump’s “America first” policies in the US mirror a broader trend towards deglobalisation that started with the UK Brexit referendum in 2016, and which brings advantages for the strategy.

More fragmented markets offer a broader selection of trends for trend followers to trade, says Joris Tolenaar in the investor relations team at Transtrend – that’s to say, a bigger and potentially more diversified opportunity set.

“New trade blocks will form. We will see differences in economic growth. We’re going to see trends in interest rates and in currency markets. In a deglobalised world, with more geopolitical uncertainty, the effects of weather on supply chains can be bigger than before, so commodities could be interesting,” he says. “Big changes always bring risks and therefore opportunity. You always keep on adapting.”

From this perspective, Trump is the product of social and economic transformation rather than its principal agent.

Grant Jaffarian, a portfolio manager at Crabel says it’s easy to imagine trend following enjoying a “gangbuster” year in 2026. In energy, in geopolitics, in AI: the world seems in flux, he says. If some of those flux points resolve in one direction or another, clear trends are the inevitable result.

Advances in nuclear energy technology could cause a collapse in energy prices, say. Equally, draconian regulation could drive prices in the opposite direction. 

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“There are probably more reasons to believe the old-world regime for trend will return rather than a new one in which trend does nothing but flatten or lose you money,” Jaffarian says. He means the sort of performance that trend followers enjoyed from 2000 to 2009, a period during which Societe Generale’s index of trend following funds climbed nearly 100%.

Powerful trends are in evidence already. The dollar weakened in the first half more than any time since the 1970s. Firms, broadly, were on the wrong side of that trade. At another time, they might have been short dollars and profited handsomely. The gold and silver rally has fuelled the sector’s bounce back in performance since the summer.

Arguably the rates outlook, too, provides grounds for optimism.

A large chunk of trend follower returns arose from being long interest rate futures over the past 40 years, Jaffarian says. “When you’re in double digit rates territory in the 1980s and you’re trending down pretty much the entire time, there are a lot of returns to generate. And you’re generating carry the whole way.”

If central banks commence a cycle of rate cuts in earnest, interest rates would switch from being a drag on portfolios to providing a tailwind. “We haven’t seen that since the early days of the financial crisis in terms of the potential movement and carry,” Jaffarian says. “It dynamically changes the value proposition of the strategy.”

Change creates trends. And more geopolitical, economic and social change seems likely.

“We could not possibly be in a more unstable macroeconomic world,” says Doug Greenig, founder and CIO at Florin Court Capital. “We’re going to get some dramatic changes. I can’t tell you exactly what they will be. But visiting the tails of the distribution seems very plausible.”