Wall Street Journal (April 21)
“If the White House wanted a test of how firing Jerome Powell would go over in the markets, it succeeded on Monday. U.S. stocks and the dollar plunged while yields on long-term Treasurys climbed after President Trump renewed his attacks on the Federal Reserve Chairman.” The President “thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality. Markets know tariffs are taxes, and taxes are anti-growth.” It is clear that the “Trump tariffs are the biggest economic policy mistake in decades.” What remains unclear is the President’s ability to see reality. “Markets are spooked because they don’t know if Mr. Trump listens to anyone but his own impulses.”
Tags: Adam Smith, Anti-growth, Attacks, Bully, Dollar, Fed, Firing, Markets, Mistake, Plunged, Powell, Reality, Spooked, Stocks, Submission, Tariffs, Taxes, Treasurys, Trump, U.S., White House, Yields
New York Times (April 21)
“President Trump’s trade war has completely upended investment flows, with global investors selling off U.S. stocks and corporate and government bonds at a clip unlike anything Wall Street has seen in recent years.” Though some semblance of “calm returned to the corporate and government bond markets late last week,” analysts are still wary of “Trump’s next moves, fearing that his protectionist policies and threats against federal institutions could re-accelerate money flows out of the United States, hitting the dollar especially hard.”
Tags: Analysts, Bonds, Calm, Corporate, Global investors, Institutions, Investment flows, Markets, Money flows, Protectionist, Stocks, Threats, Trade war, Treasuries, Trump, U.S., Upended, Wall Street
Professional Pensions (April 17)
“As political tides shift in the US, many firms are pulling back on their DE&I commitments, restructuring or scrapping entire departments in response to legal challenges and cultural pressure. And the ripples are already reaching UK shores.” The appropriate response is not “about virtue signalling, it’s about smart governance.” US backsliding presents “a real, tangible issue that UK organisations, especially those working with global partners, need to pay close attention to.” They should secure their values and their supply chains as Transport for London did “by cutting ties with Accenture … after the consultancy ‘sunset’ key DE&I policies.” TfL disallowed Accenture “from bidding on a creative contract because it no longer met TfL’s diversity criteria, stating ‘We are proud to hold our suppliers to account… making sure they are aligned with our commitments on diversity and inclusivity.’”
Tags: Accenture, Cultural pressure, DE&I commitments, Legal challenges, Political tides, Restructuring, Smart governance, Suppliers, Supply chains, Transport for London, U.S., UK, Values, Virtue signalling
Bloomberg (April 16)
Investors have learned that “there’s no way to guess what America will do next. With its on-again, off-again tariffs, the US administration has demonstrated a rare and reckless willingness to shock markets.” Given the “radical uncertainty, a financial crisis isn’t out of the question.” It is regrettable “that policymakers need to contemplate a self-inflicted crisis of this kind. But the possibility must be taken seriously. Regulators everywhere should do what they can to be ready.”
Tags: Crisis, Financial Crisis, Investors, Markets, Off-again, On-again, Policymakers, Radical uncertainty, Rare, Reckless, Regrettable, Regulators, Self-inflicted, Shock, Tariffs, U.S.
Washington Post (April 15)
A recession “looks much more likely than it did a few months ago, thanks to the cost and chaos of President Donald Trump’s tariff shock.” With its staggering debt-to-GDP ratio, the U.S. “is ill-positioned to weather another economic storm.” Should Trump’s “punishing tariff policy” lead to recession, “the government might not be able to finance economic relief with cheap debt” as the nation “has depleted its emergency reserves.”
Tags: Chaos, Cost, Debt-to-GDP ratio, Depleted, Economic relief, Economic storm, Emergency, Finance, Government, Punishing, Recession, Reserves, Staggering, Tariff shock, Trump, U.S.
Fortune (April 14)
“President Donald Trump’s trade war with China could lead to the end of globalization. But it’s not a certainty that the U.S. will emerge as the victor in the new economic world order.” Goldman Sachs posits “the U.S. may find it’s more reliant on China than the other way around.” Chinese imports account for 14% of total U.S. imports. Meanwhile, U.S. exports to China make up only 6% of total Chinese imports. The U.S. is also highly dependent on $158 billion worth of Chinese imports, whereas China’s relies highly on the U.S. for only $14 billion worth of goods. In these cases, the highly dependent import goods account for 70% or more of the market.
Tags: $14 billion, $158 billion, China, Dependent, Economic, Globalization, Goldman Sachs, Goods, Imports, Market, Trade war, Trump, U.S., Victor, World order
Wall Street Journal (April 14)
“The biggest issue in financial markets these days, other than tariffs, is the fate of U.S. dollar assets. Are President Trump’s herky-jerky decision-making and border taxes causing the world’s investors to shy away from the dollar and U.S. Treasurys?” Amid the volatility, that remains to be seen, but any shift would occur “’at the margin’ because the U.S. remains too big a market, and its financial system too liquid, to ignore.” Still, the potential impact should not be dismissed lightly. “Even a modest shift from Treasury bonds” could have enormous repercussions.
Tags: Bonds, Decision-making, Dollar assets, https://www.wsj.com/opinion/is-there-a-new-trump-risk-premium-tariffs-trade-policy-bonds-us-dollar-investing-9bee401d?mod=hp_opin_pos_4#cxrecs_s Financial markets, Impact, Investors, Jerky, Liquid, Margin, Shift, Tariffs, Taxes, Treasurys, Trump, U.S., Volatility
The Economist (April 10)
“For a good few hours on April 9th, disaster beckoned. Share prices had been falling for weeks. Then the market for American Treasury bonds—normally among the safest assets available—started convulsing, too. The yield on ten-year Treasuries leapt to 4.5%…. That meant bond prices, which move inversely to yields, had cratered. The failure of both risky and supposedly safe assets at once threatened to destabilise the financial system itself.”
Tags: April 9, Bonds, Convulsing, Cratered, Destabilise, Disaster, Failure, Financial system, Market, Risky, Safe assets, Share prices, Threatened, Treasuries, U.S., Yield
Fortune (April 8)
“The U.S. crude oil benchmark temporarily plunged below the stress-inducing $60 per barrel threshold on Monday amid tariff and economic slowdown fears, putting the nation’s record-high volumes of oil production at risk.” After beginning April above $70, oil temporarily dropped below $60 (NYMEX WTI). “Energy analysts see the $60 per barrel price as a key threshold when oil producers scale back activity and, eventually, cut back on production.”
Tags: Analysts, Benchmark, Crude oil, Economic slowdown, Energy, Fears, NYMEX WTI, Plunged. $60/bbl, Producers, Production. Risk, Scale back, Tariff, Threshold, U.S.
The Atlantic (April 7)
“In his quest to make America great, President Donald Trump is withdrawing the United States from global trade. American families, companies, and investors will pay a price for this…. But the repercussions don’t end there. The tariff regime is also destroying a pillar of American global power, and it will further isolate the country at a moment when others stand ready to fill the vacuum.”
Tags: Companies, Destroying, Families, Global power, Global trade, Investors, Isolate, Price, Repercussions, Tariff regime, Trump, U.S., Vacuum, Withdrawing
