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Your guide to Washington and the world for the 2024 election of the United States
The US exchange is completely hated by President Donald Trump’s tariff proposals. A day after the announcement, S & P fell 5 percent, 500 percent, the worst day and the pain continued on Friday. Technical stocks, small companies and banks get the worst. Easy to explain a level: Everyone agrees that the tariffs will increase the costs for US companies and drag their earnings in at least short and secondary conditions. Shares are partially valuable in earnings.
Depending on how the tariffs work on how to work, lower earnings and stock prices are an acceptable price today to pay higher internal production and salary. This seems to what time it means gossip Tariffs “will bring a little worried, but we are ok.”
However, the markets have a bigger problem than the prospect of short-term benefits. Investors and companies can adapt to many things when they know the rules. Rules with Trump are always changing.
When any new policy is applied, the markets should only estimate not only the effects of politics. Thus, the amendment we have done – as writing it, S & P is always high in February – in February – the estimate of the evaluation of the damage tariffs is always high.
However, there is a third, even more harshest assessment puzzle to solve market, because Trump’s tariff policy will be always to be a moving target. How do you price?
Why can you see why the control is calculated Probable tariff rates of trading partners. The formula is the size of the trade deficit of each country in the United States, compared to the total export of the United States. As Trump said, this “mutual” tariffs are not calculated to other countries with tariffs or non-tariffs. They are based solely on shortcomings.
This assumes that the shortcomings can result in the results of unfair trade experience, which are only liar. If the United States is in balanced trade with countries that do not sell what we need, but do you need to produce? Or another way? The policy of the Trump administration is not just wrong, is dishonest: not only tariffs or shortcomings, not a 10 percentage tariff and definition of all countries. This thing is just crazy. As the former Treasury Secretary Larry Summers, how much is the economy of the economy.
Anyone who is strongly fake believers will have regular and unpleasant runs with reality. They change the course, just to drive to the same trench again. Trump will not get what he wanted from his tariff policy, so it will continue to change it, leaps to catch the markets. Tactics will be a zigzag for the main strategic error.
Trump’s tariff calculation is only an example of an unhedarist chaos that marks the markets themselves. The contours of the policy were not telegraphed in advance and came as a mass surprise. And the announcements of Trump’s economic consultants were also seen intended for exciting investors before and after ads. Neither Trading Secretary Howard Lutnick, nor the treasury secretary Scott Bessent was ready to explain or explain the next steps. This world-changing policy written in a cram session in the world?
The whole performance is completely strangle in the “Freedom Day” in the markets with unusual cases. In the rest of the world, the rest of the United States is equal, must increase the value of the dollar (we require the needs of imports, foreign currencies). Global economic shock must demand for the dollar – it is a long time to shelter the world. But the dollar weakened. The simplest explanation is that investors see a new level of uncertainty in denominated assets and they are out of the way.
Trump, can argue, as it was today, as Mercial, and the markets flourished. But the global context has changed sharply since then. US shares and risk assets are generally more expensive than in history and other markets, more expensive, budget deficit and national debts are higher than in 2017, the lower financial country should be stimulated. Inflation demons are left out of the glass by reducing the room to facilitate the Central Bank’s money. The US economy has already slowed the pandemic boom from unstable growth rates. The Chinese economy, once the world’s growth engine, is left empty.
None of these facts are not economical fate, but the situation is more elegant and unpredictable than eight years ago. A continuous hand would really help.
Markets, companies and economies are amazingly elastic things. The given time will trade that requires high tariffs. However, the whimsical policy of the Trump leadership is no reverse. All of the produced is a heavy loss.
