The temptation of twitter is that in a rush of blood moment you can show the world (well, at least your twitter-sphere), that at times you can be an impetuous, too ‘up yourself’ smart Alec. One of my twitter followers showed her darker side late last week when the trade war began and nothing happened.
Recall the US slapping $US34 billion worth of tariffs on China, as promised. And, as promised, China returned serve. My ‘tweetster’ pondered to me: “What was the fuss all about?”
Now this lady could’ve been spooked by my “beware Donald’s tariff war” stories last week, so she was genuinely asking: “What was the fuss about?” Or else she could be a Trump fan, who thinks all leaders need to be charged by testosterone and entrepreneurial zeal, even if it means that rationality, good sense and international collegiality has to be the price.
Apart from ruining a global economic outlook that really was promising (remember, we are a country that gets a lot of money from exports), a trade war could send the stock market earthwards, really hurting our super fund balances and our stock prices. Also remember that I have a listed fund called the Switzer Dividend Growth Fund (or SWTZ), which hit its all-time high of $2.66 last week. With post-trade war talk, we’re down to $2.57!
Not happy, Donald, not happy!
Sure, I’m talking my own book but I’m also talking your wealth via super fund balances, which are typically very affected by what’s happening on the stock market. And if you’re a wealth-builder via stock-buying (or worst still, you borrow to buy stocks), Donald’s upping the ante on the trade war could be devastating.
At the moment, Trump seems as though he’s on an international tirade tour, bagging every ally he thinks or knows has been taking the US for a ride economically, militarily and even politically. In that he might have a point but the Yanks have also taken a fair bit as a reward for their international role as global cop.
I’m not saying that poor old Europe and China are innocents in the trade protection stakes. Also, soft US leaders have let their international buddies get away with some uneven trade practices and intellectual property thieving, as in the case of China. However, the USA hasn’t been a babe in the woods either.
Historically, America has given aid to countries as what lefties called “economic imperialism”, which meant it hasn’t just kept the Communist threat from the door of struggling third world countries, it has tapped into cheap resources and made a nice buck out of its ‘cop’ work.
With all this considered, I must say that I really hope Donald doesn’t go ahead with this $US200 billion upping of his tariffs stakes. The reason the market went up last week was because China (the Communist country in a capitalist world) didn’t do a Robert De Niro/Capone gangster response of “Somebody messes with me, I'm gonna mess with him”
But if Donald goes ahead with his latest threat, China could do something silly, like banning Apple and other big tech giants that now make up 25% of the S&P 500 index. I’m hoping and punting that China is too smart for that. But who knows what happens when you have Trump testosterone versus China’s Xi testosterone?
And it comes as he has berated Germany for accepting Russian energy supply and his NATO allies for underspending on military outlays, which all have been done very publicly. Now I don’t want to be accused of being racist, but nearly all my European friends don’t take kindly to aggressive criticism, so we could have a situation developing here that could have serious economic implications.
Donald is also lining up tariffs for the EU, Canada and Mexico, so if everyone in the world leadership caper decides to ‘do a Donald’ by saying what they think and acting accordingly, then a very good global economic recovery might turn into a global recession! A very nice stock market rebound for local stocks could U-turn and head down.
In addition, an improving economy, where consumer confidence has hit its highest level in 4½ years, could be side-swiped and knocked off course. This could kill job creation and predicted wage rises! So if you’re not a card-carrying Trump lover or groupie, you have to look at his tariff trade war tantrums and ask: “what the f•••!?”
I’m objective on Donald, which means I can praise him when he gets it right. But I have to call out his bad plays, when this ex-casino owner looks like he’s gambling with our jobs, business profits, wages and our super nest eggs.
Don’t do it, Donald! Don’t raise tariffs by $US200 billion, as it might awaken a sleeping giant with a testosterone problem of De Niro proportions!
By the way, the Dow was down 219 points overnight, which says the market still hopes Donald won’t go there. If he does, the Dow could go into steroidal rage mode and it won’t be pretty.