For markets, the inability to predict will kill you

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The US Securities Market completely hates President Donald Trump’s proposals. The day after their announcement, the S&P 500 decreased by 5 percent, the worst day since 2020, and the pain continued on Friday. Technical stocks, small companies and banks get the worst. On one level, it is easy to clarify this: everyone agrees that the customs tariff will increase the costs of American companies and withdraw their profits, at least by short and medium conditions. The shares are partly priced on profits.

Depending on your personal theory on how to make customs tariffs, you may consider low profits and stock prices today is an acceptable price to pay, for example, high local production and wages tomorrow. This seems to be what Trump meant when he is He said The definitions may cause “little disorder, but we are well.”

But the markets have a greater problem than the probability of low term. Investors and companies can adapt to most things, when they know the rules. With Trump, the rules always change.

When any new policy is offered, the markets have to pricing not only the effects of politics, but in appreciation of the duration of which it will continue. So the correction that we see-as is the case in writing this, is the S&P 500 is 15 percent of its highest level ever in February-it is partly estimating the tariff that will do it and partly estimate the time it will continue.

But the market has a third and difficult evaluation puzzle to solve it, because Trump’s tariff policy always Be a moving goal. How do you feel that?

You can see why by looking at the method calculated The supposed tariff prices for its commercial partners. The formula depends on the volume of the trade deficit of each country with the United States, due to its total exports to the United States. These “mutual” definitions are not calculated on the non -sharp definitions or barriers imposed on the United States, as Trump said. They only depend on the deficit.

This assumes that the deficit can only result from unfair commercial practices, which is incorrect. Should the United States balance the trade with countries that do not sell the things we need, but you need what we produce? Or vice versa? The Trump administration’s policy is not only wrong, but it is not honest: the minimum minimum is 10 percent on all countries, regardless of customs tariffs or deficit, is a mutual definition. These things are simply crazy. As former Treasury Minister Larry Samarz said, it is for the economy to be the creation of biology.

Anyone with wrong beliefs firmly will have regular and unpleasant operation with reality. They change the path, just to return directly to the same trench. Trump will not get what he wants from his customs tariff policy, so he will continue to change it, leaving the markets to scramble to catch up. The tactics will be winding with the main strategic error remaining.

Trump’s tariff account is just one example of the indescribable chaos and which the markets themselves find. The outline of the policy was not previously sent and made a huge surprise. The TV appearance of Trump’s economic advisers before and after the announcement appears to be designed to warn investors. Trade Minister Howard Lootnick or Treasury Secretary Scott Payette had not been previously informed or ready to explain the next steps after that. Was this changing policy of the world written in a generous session the night before?

The absolute strangeness of all performance was reflected by the extraordinary actions in the markets in the wake of “Tahrir’s Day”. The American definitions of the rest of the world, all of which are equal, must pay the value of the dollar (by meeting the American demand for imports, they summarize the demand for foreign currencies). Global economic shock should also pay the demand for the dollar – it has long been a safe haven in the world. But the dollar has weakened. The simplest explanation is that investors see a new level of uncertainty in dollars and the origins that are densely trapped in dollars, and they come out of the road.

Trump, one may argue, Mercuryal was in his first term as it is today, and markets flourished. But the global context has changed dramatically since then. American stocks and risk assets are generally much more expensive, compared to history and other markets, than in 2017. The budget and national religion deficit is much higher, leaving the government with a less financial area, the motivation must be needed. Granding inflation outside the bottle, which reduces the room for cash dilution by the central bank. The American economy was already slowing out of unusual growth rates. The Chinese economy, which was the world’s growth engine, is volatile.

No one of these facts is an economic fate, but the situation is more sensitive and unpredictable from eight years ago. A fixed hand will really help.

Markets, companies and economies are great things. Looking at the time, they will make the symptoms required by high definitions. But the method of making a volatile policy in the Trump administration has no bullish trend. All you produce is weight loss.

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