Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
‘Welcome To Trump 2.0’: Dollar Whipsaw Is Preview Of Volatility To Come
"Fake news."
That was Donald Trump's response on Monday to a Washington Post sources story suggesting the incoming administration's considering a more targeted approach to tariffs, where that apparently means limiting levies to critical imports. That, as opposed to the (manifestly silly) notion of an across-the-board duty on everything from everywhere.
That latter characterization's probably a straw man. If pressed, I doubt Trump would argue for a strict, no-exceptions interpretation of the wo
If I know I will be needing some cash in the next few months, I will be trying to catch the “ups” in US equities (I am terrible at this- but I will try to do my best). Looks like 25 is going to be volatile. I’m not going to get too worried, however, unless long term rates keep going up.
Luckily for my dad (he turns 91 tomorrow), he has some USTs maturing in the next month, which I will be able to roll over at higher rates.
Great job on currency, even the WaPo story is a good mention, if not the full dissection. It is called running it up the flagpole in 1970’s speak. The economically ignorant President and close advisors toss many bad ideas around. Reagan and Trump are wildly ignorant and irrational so advisors flummoxed with the failure of logical arguments run dumb ideas up the flagpole to see how badly the market retches. There is no pressure now so this is a bland one – and quickly corrected – to trading rooms’ glee. Much bigger bad ideas are coming when the pressure is actually on. Trading rooms rejoice as profits reside in every one of these mis-speaks, Fake News, under the table leaks, and plain old confusion. Hooray for the mess ahead – let’s hope it is not really serious (unfortunately at times, it will be!)
“all he really wants from other countries are concessions and flattery, not necessarily in that order”
I respectfully differ with your consensus view. Unlike his 2016 campaign, Trump rarely brought up demands for a level playing field and curtailing subsidies made by foreign governments during the recent campaign.
If you can believe the man at all, his new tariffs goals are to raise revenues to pay for tax cuts and increased spending and as a way to make American industry great again. And in the last days of his campaign and subsequent to his win, he added that they would be used to force other nations to bend to our will when it comes to immigration, drug production and following the US lead on blocking technology exports to China. (The latter have been facing growing push-back from South Korea, Japan and the Netherlands who are weighing the cost to their own vital industries.)
My “out there” take is that he wants to replace Teddy Roosevelt on Mt. Rushmore. He dreams of leaving a legacy as being the man who brought back industry and prosperity to the US. Forcing China to buy more soybeans or the EU to import more LNG are hardly sufficient.
Sure, he could replace one of the other presidents on Mt Rushmore OR he could commandeer the Crazy Horse Memorial and have it turned into one of his masculine fantasies of himself with oversized muscles astride a bull.
Fever dreams.
Tariffs will help congress get to budget neutral on their mega-bill so that they can squeeze it through the Senate under reconciliation. It makes sense for Trump to leave that to them while using the interim time to drive hard bargains where he can.
As for inflation, Trump will never take the blame for any that pops up. He’ll blame the Fed, China, immigrants, whatever, but he will never take responsibility, and his supporters will believe him.
As you suggest (from YahooFinance today):
“Trump’s ongoing tariff rhetoric comes after a weekend where, as part of his endorsement of “one powerful Bill” to implement his early economic agenda, he again promised that tariffs would be deep enough to pay for his expensive tax cut plans.
He wrote that the trillions of dollars in shortfall “WILL ALL BE MADE UP WITH TARIFFS.””
Hey! It finally hit me. Tariffs to fund income tax cuts are a backdoor way to fulfill a n old conservative dream = tax consumption to lift reduce or eliminate taxes on investors and savers. A very Calvinist approach to economic policy. And so much more palatable than a national sales tax or, God forbid, a VAT (too European for Americans).
What a nice gift to Trump’s base of lower income voters!
I should not try to type on a phone!
The national sales tax advocates wanted to use it so that a flat tax of 15% with few deductions could be funded. That brought protests from those who pointed out that it would be regressive, mainly impacting the lower 50% of us who would receive little benefit in return. There’s the “genius” of suggesting tariffs to fund the income tax reduction rather than a sales tax or VAT. “We’re making foreigners pay for it!”
Yet, I doubt that Trump has that side of it in mind. Rather, it smells like something Musk, Vance and Theil thought up to use their figurehead leader’s love of tariffs to sneak this through. It reminds me of a GOP debate last century when Malcom Forbes suggested large tax cuts. Pat Buchanan replied, “That sounds like something the boys down at the yacht basin cooked up.”
The boys down at the yacht basin, indeed!
STEVE Forbes!
Re: “Every child knows you start by demanding ice cream for breakfast and lunch and dinner under threat of all-day tantrums, and then you go from there.”
My non-ambulatory 92 year-old father moved into an assisted living two years ago. His meals are brought to him in his room. Within two weeks he had the staff trained to bring him ice cream with every meal. Our family tried to hold the line at 2 scoops every meal, but half the time I’m there at mealtime they bring him 3 or 4. I think negotiating this second childhood triumph brings him more joy than his other successes in life did!
H-Man, he will not believe that tariffs are inflationary and will use tariffs as a weapon or at least the threat of a weapon. The sycophants that surround him are going to question their sanity for providing the king with fealty.
He discovered that tariffs are an area of unfettered presidential power. That is the reason he uses and overuses this tool. I think it used to be president’s were forced to not use tariffs as a weapon as they have such a poor track record. However this guy only considered the impact of when the tariff lands, not the future it wroughts. Therefore expect him to use and overuse tariffs for it is a stick he can use on anyone he wishes.