Is the trade war really all about the mid-term elections?

US President Donald Trump’s trade war could damage the global economy, but is he just playing politics? Steve Mnuchin did not hold any formal meetings with China at this weekend’s meeting of G20 finance ministers in Buenos Aires. This is despite the US Treasury Secretary indicating recently in Congress that he was prepared to reopen … Continue reading “Is the trade war really all about the mid-term elections?”

Globalisation – Nothing new under the sun

There is nothing new about geopolitics. Geography – both physical and human – has influenced politics and international relations for centuries, even millennia. But the nature of geopolitical risk has changed over time. During the Cold War, geopolitical risks for Western governments and the corporate world were focused on Moscow’s motivations and behaviour, the possibility … Continue reading “Globalisation – Nothing new under the sun”

Why is this such a worried bull market?

Normally bull markets are full of people who are optimistic. They radiate enthusiasm for economies and shares. They hunt down markets or individual stocks that look cheap compared to the rest and recommend them. They recommend simply buying the global or local market to join in a general uplift in shares they expect. Eventually you … Continue reading “Why is this such a worried bull market?”

Trade War: A game of strategy

Donald, who? In early 2016, Parmenion used the incoming US President, Donald Trump as the theme for our regional roadshows. Who was he and what were his plans? We talked about The Wall, his infrastructure plans, tax cutting ideas and the promised support for the military. We didn’t foresee the Russian investigation, high White House staff … Continue reading “Trade War: A game of strategy”

Investors are hoping Trump is playing tactics

When equity markets were hitting new highs Donald Trump was taking all the credit. “The reason our stock market is so successful is because of me,” the President declared to journalists aboard Air Force One. But the problem with this attitude, as noted by Barack Obama’s former press secretary Jay Carney, is that if you … Continue reading “Investors are hoping Trump is playing tactics”

America First – At what cost?

Just as economies around the world show signs of growing in sync (which is rare) Donald Trump has announced tariffs on imported steel and aluminium. Stock markets reacted badly to the news, on fears of a possible trade war. After taking rising interest rates and stock market volatility in their stride, the threat of protectionism … Continue reading “America First – At what cost?”

Trade deficits and tariff wars

President Trump believes that if you are running a large deficit it should be easy to “win” a trade war. The problem with this argument is the EU and China may decide to engage. In 2016 the US ran a deficit of $505bn on trade in goods and services, according to the World Bank. Germany … Continue reading “Trade deficits and tariff wars”

Trump’s tariffs

Last week, the White House announced tariffs on imported steel and aluminum of 25% and 10% respectively – a move that sparked global indignation and threats of a trade war. But tariffs are more common than you may imagine. Almost every US president since Ronald Reagan has announced a tariff of one kind or another. … Continue reading “Trump’s tariffs”

Will the US infrastructure plan be effective?

The United States (US) presidential plan is to raise $1.5trn to $1.7trn to spend on US infrastructure over the course of the next ten years. The proposed plan aims to restructure the permitting process, which is currently inefficient and may have actually disincentivised investment efforts. Where is the money coming from and what will it … Continue reading “Will the US infrastructure plan be effective?”

The US budget should help economic growth

The Trump administration White House has set out its preferred budget for 2019. It is likely the House and Senate will wish to tone down its dramatic proposals. The President’s wish is to boost military and veterans expenditure substantially, whilst cutting back hard on various other departments and programmes. A 13% increase in defence is … Continue reading “The US budget should help economic growth”

What does a normal interest rate look like?

Markets have been worried that interest rates in the west are heading back to normal in a hurry. If rates go too high too soon they could damage the recovery and do more harm to shares. As the West agonises over the pace of putting up interest rates and winding down special monetary measures, the … Continue reading “What does a normal interest rate look like?”

One year of Trump

January 20th marked Donald Trump’s one-year anniversary as US President.  So far, his tenure has proved controversial and divisive, both domestically and abroad. His attempts to take credit for the performance of the US economy and equity market should be taken with a pinch of salt, particularly given the considerable momentum carried over from his … Continue reading “One year of Trump”

What is normal for the Fed?

As expected, the US Central Bank has raised interest rates to 1.25% and talked about normalising its policy. The statement included detailed guidance on what the Federal Reserve intends to do next. During the financial crash and its aftermath the Fed bought up large quantities of Treasury bonds and mortgage backed securities, forcing interest rates … Continue reading “What is normal for the Fed?”

Trump’s first 100 days: how markets have performed

Is the “Trump bump” over? The surge in the stockmarket, the dollar and bond yields that welcomed Donald Trump’s arrival at the White House has shown signs of flagging as his first 100 days approaches. Donald Trump sailed into the White House on a wave of populist, pro-trade polices. He promised to spend big, create … Continue reading “Trump’s first 100 days: how markets have performed”

Fed policy: it’s conditional

Remarkably few economic decisions depend directly on the interest rate set by the US Federal Reserve (the Fed). Yet with this tool, the central bank is able to exert vast power over the US economy and to steer it towards the Fed’s dual mandate of full employment and 2% inflation. The key to understanding how … Continue reading “Fed policy: it’s conditional”