Roman Emperors used to distract people with “bread and circuses”. Today, it seems Bitcoin is playing this role. The Tariff War is at major risk of repeating 1930’s Smoot Hawley Tariff Act. It introduced tariffs to “protect” the economy. And it led directly to the Great Depression.
Chemicals and the Economy
Bond vigilantes start to push interest rates higher – and impact auto/housing markets
Borrowing makes a lot of sense when interest rates and inflation are low. But now, both are returning to more normal levels. This will increase default risk, as companies and people with too much debt find it more difficult to make their repayments.
Apple set for double hit from Trump’s tariff war
China is Trump’s main target. He has claimed that China will pay the extra cost. But US consumers know better. They rushed to buy in March before prices rose. Q1 US sales were up 12% as Apple flew-in 1.5m iPhones ahead of the start of the tariffs.
Sell in May, and go away?
President Trump’s Tariff War will soon lead to empty shelves at Wal-Mart, Target, Home Depot and many other stores this month. The famous saying “Well in May and go away” might be a prudent policy for investors.
Trump’s Tariff War risks empty US shelves at Walmart, Target, Home Depot
Last week, the CEOs of 3 of the largest US retailers told Trump that “His tariff and trade policy could disrupt supply chains, raise prices and empty shelves.” The heads of Wal-Mart, Target and Home Depot suggested the disruptions would become obvious in early May – only 2 weeks away.
President Trump’s trade war risks crashing the global economy
Clearly, the US is most at risk from all these changes. Its ‘soft power’ depends on its global reputation. And its ‘hard power’ depends on its global alliances. But President Reagan’s warning applies to all of us: “Then the worst happens: Markets shrink and collapse; businesses and industries shut down; and millions of people lose their jobs.”
“There are decades where nothing happens; and there are weeks where decades happen” VIadimir Lenin
We are now back in a world where geopolitics, not economics, drives decision-making. It is a world of shifting alliances. And so defence spending is set to be a key growth area for the future as Cold War 2.0 begins.
6 ‘Rules for Success’ as tariff wars and Europe’s Clean Industrial Deal begin
The Rules for doing business have to change. As NATO’s leader, Mark Rutte, has warned, Europe needs to “Raise defense spending or start learning Russian”
Trump launches trade war with US’s top 3 trade partners; says Europe & key business sectors are next
“The Dumbest Trade War in History. Trump will impose 25% tariffs on Canada and Mexico for no good reason.” Wall Street Journal editorial
China risks entering a debt trap as its housing bubble continues to deflate
Deflation means the real value of debt increases. This is the opposite of what happens with inflation, when its real value reduces. China’s ageing and falling population therefore risks entering a debt trap. More and more money will be needed to refinance existing debt, accelerating the slowdown in the wider economy.
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