31 March 2020
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Let's pray this is another bluff play by the master of entertainment.

Trump's trade war hots up today. There will be blood!

Peter Switzer
19 June 2018

Here we go again on another Donald Trump stock market slide, as our investments and our super are the temporary collateral of Trump’s famous deal making that is redefining international politics!

Sure, it’s never boring with Donald but when it comes to making money, sometimes the boring can be exciting.

Let me be absolutely honest about my Trump observations: this guy has cost me money! However, if he pulls off his deals (getting trade concessions from China, Europe, etc. and avoiding a trade war), then there’ll be a pay off, even for us.

I have a listed dividend growth fund on the stock market called the Switzer Dividend Growth Fund, whose progress has been trumped by the Royal Commission and Trump himself.

The fund, whose ticker code is SWTZ, has to be long banks and other financial companies because they’re the best dividend payers, along with Telstra. But since Donald has been flirting with tariffs threatening a trade war, the stock market has found it hard to get really positive.

The tariff talk even undermined great profits in the USA for the first quarter, which should have sent stocks rocketing higher. But the fear of a trade war stopped Wall Street going higher and that then affected our market.

My fund, which listed late February last year, has brought in about 5% in dividends after fees over that time. And its unit price has gone from the listing price of $2.50 to a high of $2.63 and down to $2.42.

Trump plus his tariff threats plus the bank bashing of the Royal Commission and Telstra’s troubles have made life hard for SWTZ.

However, as I’ve been predicting in our subscriber investment newsletter (the Switzer Report), banks were bound for rebound because the stock market has really over-bashed their share prices.

They had something coming because of their bad behaviour but this recent stock market mugging looked excessive. As of late last week, the bank share prices have sneaked up and SWTZ got to $2.56 yesterday before losing a cent, as our stock market went from a 40-point gain to a 3-point loss. This happened after Donald said that if China imposes retaliatory tariffs to his tariffs, he’d raise the tariff torture on China from $US50 billion worth of goods with an import tax of 25% to an extra $US200 billion worth of goods with a 10% tariff!

The likelihood that China won’t back down has sent the Dow Jones Index down over 300 points. I can’t help but think of my relatively safe kind of fund being rocked today by the gambling of the former casino-owning US President, who despite his hype, has not always won with his high stakes gamble plays. The GFC brought his casino-expanding days to a very publicly embarrassing halt, though he did craftily get himself out of that financial jam without serious brand damage.

Donald’s ability to save his own skin is legendary but he’s got a lot of human collateral left in his swashbuckling, entrepreneurial path of construction and destruction!

The next scene in this rehearsal for this trade war play, which right now is nothing more than threats, will be China’s expected upping of the ante. This would be followed by more stock market anxiety and yes, a lower unit price for SWTZ.

And spare a thought for poor old Andy Penn, who does his Telstra strategy day revelations today. Andy would dearly love to say something that gets the stock market excited to help his share price.

Telstra started the year with a stock price of $3.75 and recently hit $2.74 but lately the market cut Andy some slack, with the price sneaking up to $2.91. If Andy underwhelms today with the market sliding because of Trump’s trade war worries, then this could be a bad day for Andy, his share price and my poor old SWTZ.

One day when the Royal Commission is over and if Donald dodges his own trade war, then SWTZ will rebound. But what Andy says today could be the biggest determinant on Telstra’s share price going forward.

I hope Andy has a good day. And I hope Donald and China start negotiating before July gets here because that’s when these tediously terrible tariffs are expected to start.

Pray this will be another Trump bluff play that worked with high stakes poker game with his new buddy Kim Jong-un.

I know Donald is entertainment plus, but he’s not good for anyone with a lot of money in the stock market and prone to nervousness!


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