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‘Extreme’ US Policies Risk ‘Ugly’ American Exceptionalism
Way back last month, JPMorgan described three types of US economic exceptionalism: "Good," "bad" and "ugly."
I talked at some length about each in the Weekly dated February 8 (reach out if you want a resend), but the crucial point is that "ugly" US exceptionalism looks like max tariffs and an "extreme" version of Trumpian economic nationalism.
In such a scenario -- and assuming it persisted for long enough to matter -- both the US and the world could suffer a trade-related growth shock. That w
“For that to take place, we need to clear more headlines on the less market-friendly policies.”
Standing by…… see if that if becomes an is
If people close to Trump have successfully pitched him on a “take the pain now, time the bounce for the midterms” strategy, then the Trump put has been re-struck meaningfully lower.
Big Bath it is.
10-4
Considering how self-deluded Trump is, he might start to believe that’s what he intended to happen all along.
And he’ll both claim credit for it and simultaneously blame Biden.
I have been researching the 1970’s to see how various investments fared during that prolonged recession. It wasn’t pretty. Commodities (led by oil and gold) did well. Oil because of the constant shortages, and gold because of inflation–recall, we had just come off of the gold standard in 1971. Agricultural commodities and farmland (of all things) did OK. There was also a real estate boom in California.
Stocks fared poorly overall. The “nifty-fifty” or “blue chip” stocks underperformed. Energy stocks, consumer staples, REITS, and utilities fared slightly better; while tech stocks (companies like IBM, Xerox, and Polaroid) were rather mixed. Corporate dividends were much higher then, so earnings calculations were very different. Treasury bills (cash) held their own, while corporate bonds and ten-years got smashed.
It is hard to imagine the “Mag-7” or “American Exceptionalism” declining, but it has happened before. All it took was a few policy missteps, and a black swan event (oil). What was truly surprising was how long it took to regain stability and confidence back (several years and more than just one president). To quote a great 70’s film, if Trump continues to “meddle with the primal forces of nature,” we could see things turn in ways that seemed unimaginable just a few months ago.