Displaying items by tag: Trump

(Washington)

President Trump has been leading a tumultuous trade war with the US’ largest trading partners. So far his efforts have put tariffs on many different goods, but with metals being the single most notable materials. However, a new interview with the President suggests that the metal tariffs were just an opening act to a much bigger area: autos. In an interview with Fox News yesterday, Trump said “You know, the cars are the big one … We can talk steel, we talk everything. The big thing is cars”. Trump is reportedly planning a 20% tariff on all imported cars as part of a national security measure.

FINSUM: We believe this would be a major line in the sand to the US’ trading partners. Both our Nafta partners and the EU, and maybe Japan, would be furious about this, but it is a major source of leverage for the US.

(Washington)

The trade war between the US and China is intensifying. Investors will already be aware of the tit-for-tat $50 bn tariff packages the US and China have placed on each other, as well as Trump’s plan for a further $200 bn to be applied. However, the news is that Trump is now also preparing a comprehensive package of blockages to Chinese direct investment into the US. The amount of Chinese overseas investment flowing into the US has already plummeted to $1.8 bn in the first half of 2018, down from nearly $50 in 2016.

FINSUM: This trade spat just keeps escalating. The big risk is if China decides to sell US Treasuries and agency bonds as a payback, but we think that is still a few steps away.

(Washington)

Despite lots of hopes that a US-led trade war would never come to pass, it is now happening. The US has just imposed $50 bn worth of tariffs on China, which is an escalation of previous metal tariffs, and appears to be a major step towards starting a global trade war. With that in mind, how can one protect their portfolio? While almost all sectors are affected by a trade war, the worst ones will be industrials, autos, and meat producers. Auto companies are likely to be hit very hard by tariffs, so it is best to stay away.

FINSUM: The other thing the market does not seem to be taking into account is that tariffs seem likely to increase US inflation, as companies tend to pass along the increase cost of production onto consumers. That could be an additional downside risk, but one potentially offset by the chance of recession.

(New York)

Before President Trump got elected, and immediately after, there was a great deal of excitement that financial firms were going to experience a flourishing as the US cut back heavily on financial regulation. 500 days in that hope has failed to significantly materialize. While small and medium sized banks have benefitted, and the DOL’s fiduciary rule is gone (great for wealth management), large banks have not seen gains. For instance, the Fed has made stress tests for large banks more stringent.

FINSUM: Banks had the prop trading rules (Volcker rule) weakened recently, so that is positive, but otherwise there hasn’t been much change.

(Washington)

President Trump seems to have emerged from the summit with North Korea with a very high degree of confidence that the situation there has been handled. Trump put in writing yesterday that “there is no longer a nuclear threat of North Korea”. Interestingly, North Korean state media also reported the meeting as a major success, but did not mention denuclearization at all. Trump did backtrack a bit, saying “I may be wrong. I mean, I may stand before you in six months and say ‘Hey, I was wrong’. I don’t know that I’ll ever admit that, but I’ll find some kind of an excuse”.

FINSUM: We think this summit was a success and that Kim has played the whole situation very sharply. Our only concern is the lack of detail about how North Korea will actually go about denuclearizing.