16 November 2019
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Every move he makes, every breath he takes, I'll be watching him

Peter Switzer
26 September 2019

My editorial team says Trump stories are becoming less popular with our readers, so I thought I’d give it one good old school try to sell the importance of watching every move Donald makes.

Trump, like him or not, is a huge winner in the political stakes and history won’t forget him. But based on our readership numbers, Bill Shorten held more interest as the eyeball numbers rocketed up in the pre-election phase this year.

So a guy who now has become a political “has been” held more interest than one of this planet’s greatest attention seekers in Donald Trump. And this irony gets even more ironic when you understand that Donald is the most powerful wheeler and dealer in the most powerful country in the world and he has a direct impact on the lives of Australians.

Does it say something about our hometown bias and our myopic view of the important things in the world?

Maybe but it could be that Aussies simply don’t know how important Donald is to our individual bottom lines, so let me change that.

I’ve taken a big bet on a Trump trade deal by remaining long on stocks and so have all of us who are in super funds. Donald has been crucial to the great performance of our super funds, so even if you don’t like him, his unusual ways have been good for stocks and therefore your super.

On the other hand, if he fails to end his own trade war with a trade deal, and, in fact, escalates the tariff hikes, then Wall Street will sell off, which could tip the world economy into recession. This time I don’t think we could avoid a recession, like we did in the GFC of 2008, so it’s why I watch every move he makes.

But that’s not all.

A Trump-created recession would result in job losses, along with business and consumer bankruptcies, which then would have a knock on effect on house prices. So even if you escape the recession, your home will lose value. This will mean possibly one or both of your most loved material assets — your home and your super could get ‘trumped’!

On the flipside, if Donald talks China into playing fair on intellectual property theft and doing business in China, then the stock market could spike 10-20% over the next year. US-based Joseph Fahmy of Zor Capital (speaking on CNBC) maintains that in 2020 we’ll see the Dow at the 30,000-level, which implies an 11% gain. And that would be great for our stock market and super funds.

A trade deal would reduce central bank concerns about a recession and should stop interest rates falling and it might even rid Europe and Japan of negative interest rates. This would also coincide with businesses worldwide starting to invest more confidently, which in turn would breed higher rates of economic growth, elevated levels of business and consumer confidence and job creation. And we should start seeing more meaningful increases in wages.

I hope you’re getting the picture of why Donald J. Trump is someone who has to be watched very closely.

And one of the reasons was shown clearly this morning when the Dow Jones Index spiked on the President telling us that a China deal could come soon. The jump was only 160 points but that’s because the market has got used to Donald’s negotiation style of “keep everyone guessing”.

Sure, I know he can’t be trusted and I told a business group last week, who asked me to predict what he’ll do, that I was an economist not a psychiatrist, but I’d do my best.

It was only last week that Donald was saying that “no deal” should be expected before the November 2020 election. The week before that, he said a partial deal was a possibility. But a few days later, he said he didn’t want a partial deal. I know he has become famous to a younger generation via his TV show The Apprentice but really he should have hosted Deal or No Deal!

Anyone who needs proof of Donald’s impact on our wealth should look at the showing of some of our best super funds over the past three years, during which he has been in control of the White House.

Have a look at the three-year returns of our top super funds as calculated by www.superratings.com.au and see why Donald has been kind of good for you.

Over the past three years, we’ve had the Royal Commission pull down bank stocks, which are crucial for the market index that super funds rely on. We’ve had a big fall in house prices and really low levels of economic growth, restrictive lending practices and a revolving door of Prime Ministers but our top super funds have been returning 9-10%!

And how is Donald connected? Well, our super funds now invest heavily overseas and they would have a big exposure to the S&P 500 Index, which has America’s best 500 listed companies. Since Donald became President, it has surged 43%.

Yep, love him or loathe him, Donald has had a big impact on our super and he could make or break our economy.

That’s why I watch every move he makes.

If you liked this article you'll love the Switzer Report, our newsletter and website for trustees of self-managed super funds. Click here for a FREE trial and to hear more of Peter’s expert commentary and advice.

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