♠ Posted by Emmanuel in Trade
at 12/25/2018 04:58:00 PM
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| Donny Demented must decide between Tariff Man and Dow Man since he likely can't be both. |
Infamously, he tweeted that he was "Tariff Man" on December 4, tanking hopes that the US would cool its trade war, especially against China. The Dow Jones fell 800 points on his tweet. As the saying goes, it's all been downhill for American stocks since then. You see, the Dow Jones Industrial Average's 30 corporations are among US firms deriving the largest share of their revenues from overseas. So, obviously, the more Trump threatens to undermine global supply chains stretching the world over by slapping tariffs on these companies' imports, the worse their earnings are expected to be--and this is reflected in their stock prices being lowered in the here and now.
So which will win out, Dow Man or Tariff Man? Although Trump says tariffs have helped the stock market rise earlier in his term, few market commentators would agree.Which Trump persona will win out if he can't have both?
“Trump loves two things very much: tariffs and a rising stock market. It’s becoming increasingly clear he can’t have both … ‘I think Trump the Dow Jones Man is ultimately going to eat Trump the Tariff Man,’ said one former senior administration official intimately familiar with the president’s stock market obsession, citing Trump’s touting of a recent agreement to hold off on increased tariffs after a dinner with Chinese President Xi Jinping. ‘What he agreed to after that dinner had basically been on the table for two years. He knew he had to give Wall Street something.’Something has to give, and some have placed their bets on rampant protectionism. That is, Dow Man trumps Tariff Man. Still, you have to see both sides in this trade skirmish. how much can Trump take before suing for peace? Certainly, the leader in a (for now) democracy has to be more responsive than the PRC leadership which does not have to be. The Yanks have (for now) real elections:
“The question is, what is Trump’s pain threshold? And what is China’s pain threshold? It’s almost like two cars zooming toward each other. Which one is going to turn first?” asked Stephen Moore, visiting fellow at the Heritage Foundation and an outside Trump adviser. “If the stock market fell another 1,000 points it would give him pause. He does love a bull market and hate a bear market. But he also feels this is the fight of our lifetime.”The stock market cratering is undermining one of Trump's claims to progress, which is a rising market:
Trump and other senior administration officials, including Treasury Secretary Steven Mnuchin, have long considered the stock market a scorecard on White House performance. Trump has touted a rising market over 30 times on Twitter since taking office. And senior aides say he watches market moves throughout the day on cable news and regularly asks how his potential decisions will impact Wall Street.I too think Dow Man will win in the end, but it may still be some time until we see his emergence. First, the anti-globalist forces in his coalition must be placated, then we move into more of what passes for normalcy in Trump's administration.
“You walk in the Oval and he wants a stock market quote, I give him that,” Larry Kudlow, Trump’s top economic adviser, said in a recent interview. When the market is falling, Trump wants to know precisely why, Kudlow said.
