This year has already proved lively. The benign conditions of 2017 have been replaced by a cocktail of sharp slowing of economic activity in the UK and Eurozone economies, an accelerating US economy, rolling emerging-market crises and a US President fulfilling his ‘America first’ election pledges; since when do politicians stick to their promises?! As I look forward to the rest of the year, conditions will remain challenging; for an active investor, challenging is good.

Recent weeks have seen a succession of mini emerging market crises. First in Argentina, then Turkey, Brazil and most recently Pakistan and South Africa. Every major cycle of US monetary tightening in the past has spawned a crisis – sometimes in the US, sometimes elsewhere. With the US Federal Reserve having raised its policy rate for the seventh time; the casualties of this monetary cycle are showing. Successful navigation of global financial markets will require investors to keep an eye on Emerging Markets. Many commentators will tell you that Emerging Market economic fundamentals are strong and undeniably, they are stronger than they were. Babies and bath-water however come to mind.

Trump’s tantrums now define the US political approach to the rest of the World and many trust that everything is a bluff. That said, with the latest survey of US small business sentiment – arguably the bedrock of Trump’s support, surging to a multi-decade high, any idea that Trump might back off from his pre-election promises looks mis-placed. On current trends, the World is going to have to factor in a second Trump Presidency and, if so, the US looks set to take a bigger share of the pie.

It is economic contrasts that will shape markets for the rest of the year. The pan-European (and Japanese) slowdown of earlier this year was supposed to be a quirk of the weather (the ‘Beast from the East’). Well, a warm summer is upon us (especially, in recent weeks, for Herald readers) and activity levels remain subdued; so much so that the ECB recently were unexpectedly coy about the pace at which they will move away from the current extra-ordinarily easy monetary stance. Meanwhile the World’s largest economy - the US - is sprinting ahead, raising the global cost of capital. The oil price has risen on strong US growth and falling stockpiles and, in contrast with previous cycles and thanks to US shale production, this is unlikely to check the US economy. These are challenging breaks with precedent; history can only ever be a guide.

While investors have enjoyed good gains for several years, future victories will be harder won. The good news however is that economic policies, including those of the US, remain expansionary. Equity markets may look expensive – especially if you are looking up from 2009, but they are still worth owning. Previously it mattered less about what you bought; with policy and growth trends diverging, regional selection now matters.

In previous columns, I highlighted the merit of buying the US Dollar on the argument that tighter money and loose fiscal policy are optimal for a currency. The Dollar has rewarded my faith and on current trends it looks set to move higher, boosting the potential gains from investing in US stocks (which are already benefiting from strong corporate buying as well as tax cuts).

With strains and volatility set to increase, it remains important to maintain balance through investments that should re-rate when the storm clouds gather, and which won’t fall much when the sun is shining. During the recent equity market set-backs, US long bonds have been the useful offset we suggested in January. With the US economy growing so strongly – the latest estimate of real-time growth is nearly three times the expected long-term potential growth rate, US bonds will not always prove the defensive offset asset of choice; investors need to be adroit in the ‘insurance’ they buy but buy it they should.

Stephen Jones is chief investment officer at Kames Capital.