Last month, we flagged that the post-War institutional order was eroding and that such an environment was supporting structural exposure to defense, weapons systems, rare earths, and copper, driven by re-armament, supply-chain security, and strategic stockpiling. The last days of February proved us right. We will not comment on the current events in the Middle East, but we will come back to two major US-centric shocks that marked this month and that will shape our investment strategy this year. 

Shock 1: the FED new chairman marks a reconfiguration of monetary policy 

The nomination of Kevin Warsh as Federal Reserve Chair signals more than a leadership transition — it represents a deliberate reconfiguration of monetary policy around America’s AI ambitions. Warsh, embedded in a network that includes Palantir CEO Alex Karp, hedge fund titan Stan Druckenmiller, and Treasury Secretary Scott Bessent, brings a clear ideological mandate: redirect Fed policy from Wall Street accommodation toward Main Street growth. 

The policy pivot is sharp. Where Powell maintained elevated rates and continued monetizing public debt, Warsh is expected to cut rates and halt balance sheet expansion — a shift that compresses financial asset multiples while supporting real economic activity. For investors, this is a rotation signal: long duration fixed income and rate-sensitive equities face headwinds, while productivity-driven sectors — particularly AI infrastructure — stand to benefit. 

The Palantir angle is notable. With 42% of revenues tied to the US government, Palantir sits at the operational center of a broader strategy to deploy AI in federal operations. This is not incidental — it is structural. That said, skeptics at Bank of America and SMBC caution that the Fed’s balance sheet is unlikely to shrink meaningfully, and that radical policy breaks are harder to execute than to signal. Investors should position for directional change, but size for disappointment. 

Now, Warsh was nominated on January 30, 2026, but is not yet confirmed — Senate approval is required, and he’ll actually need to be confirmed twice: once as Fed Governor, and again as Chair. Assuming confirmation proceeds, Warsh would realistically take the helm around the June FOMC meeting. The direction is clear, but the timeline carries political risk — and any delay past May could inject meaningful uncertainty into markets.  

Shock 2: the US supreme court tariff ruling, how to trade this 

On February 20, 2026, the Supreme Court struck down Trump’s IEEPA tariffs in a 6-3 ruling, finding that only Congress — not the President — holds the constitutional authority to impose tariffs. The decision invalidated both the “Reciprocal Tariffs” imposed on Liberation Day 2025 and the fentanyl-related tariffs on Canada, China, and Mexico, with approximately $175–179 billion in duties already collected now potentially subject to refund. Trump immediately counterpunched: invoking Section 122 of the Trade Act of 1974 to impose a new 10% global import surcharge effective February 24, 2026 — capped by law at 15% and limited to 150 days, after which Congress must act to extend it.  

For investors, three dynamics matter. 

• Short-term, the ruling reduces tariff rates temporarily, offering relief to import-heavy companies — but uncertainty remains the central issue, as businesses have spent a year making investment and pricing decisions against a backdrop of rapidly shifting trade policy. 

• Medium-term, the 150-day Section 122 clock creates a hard political deadline that forces a Congressional vote on tariff extension — right before the 2026 midterms. 

• Long-term, the decision eliminates IEEPA as the President’s fastest tool for imposing broad, open-ended tariffs overnight, though Section 232 and Section 301 authorities remain available and are harder to challenge legally.  

The investable takeaway: the effective tariff rate dropped from 16.9% to ~9–10%, but the administration has signaled it will reconstruct the same revenue base through alternative tools. Treasury Secretary Bessent stated that combining Section 122, 232, and 301 tariffs “will result in virtually unchanged tariff revenue in 2026.” Position in domestic producers with no import dependency and companies with flexible supply chains — and watch the 150-day congressional deadline as the next major catalyst. 

Market structure: risk lurking underneath 

Excess in the US market is nowhere better captured than in the explosive rise of US margin debt (figure 1). Indeed, US margin debt hit a record $1.28Tn in January, posting its 9th consecutive monthly increase. Over the last year, margin debt surged +$342bn, one of the fastest increases since the 2000 Dot-Com Bubble. The surge is now outpacing the S&P 500 gains by the widest margin since 2021, before the 2022 bear market started.  

Fig. 1 – US margin debt

source:Finra

The rise in margin debt, along with the political uncertainties explain why professional investors are selling (figure 2). 

Fig.2 – Goldman Sachs Prime Desk Trading Flow

source:Goldman Sachs

Indeed, data from Goldman Sachs suggest that hedge funds sold global stocks at the fastest pace since April 2025. Net selling through Feb. 19 was 1.4 standard deviations below normal, led by North America and Europe, with short sales driving much of the activity. Financials saw the largest disposals, while energy, health care, and staples were net buys. Despite the selling, hedge fund performance in early 2026 remains solid amid market volatility and AI-driven uncertainty. 

Indeed, though we are in the camp of those who believe that AI & robotics ushers in a singularity reshaping the whole world (we participate to this), we also note that continued AI-related capex spending is now more than 2% of GDP, which is more than we spent on the railroads in the 1850s. But – behold! – this investment in AI was already huge, and now companies are telling us it is going to be even bigger (figure 3).  

Fig. 3 – Big Tech Capex (USD bn)

source:Carson

Portfolio Implications 

We are maintaining our current investment positioning. While recent developments in Iran and the broader Middle East have increased headline risk, our base case remains that the situation will prove transitory rather than structurally destabilizing. 

At this stage, we do not see evidence of sustained regional contagion or a durable shift in the macro backdrop. As such, we view current volatility as event-driven and unlikely to alter our medium-term asset allocation framework. 

• Maintain pro-risk positioning while liquidity remains supportive, but reduce reliance on passive beta 

• Structural overweight: defense, strategic metals, and energy transition inputs 

• Tactical hedges: Nasdaq downside protection amid political and valuation risk 

• Diversification: selective emerging markets exposure, with a focus on China 

• Hard assets: gold as a strategic hedge against USD structural debasement, with disciplined risk management