The economy can grow (just like a self-driving car can move forward) (1) if workers can make an increasing quantity of goods and services each year, and (2) if non-elite workers can afford to buy the goods that are being produced. If these workers find fewer jobs available, or if they don’t pay sufficiently well, it is as if the engine of the self-driving car is no longer working.
While Trump seemingly remains the only topic worthy of discussion blanketing the airwaves, as the following chart from Goldman demonstrates, it has been China where policy uncertainty has stealthily exploded in the past three months.
Call it passive-aggressive currency war: the White House is exploring a ways to discourage China from devaluing its currency, without explicitly branding China a currency manipulator - the move move is the latest indication the Trump administration is softening its stance on China.
The EU and other US trading partners have begun laying the groundwork for a legal challenge to a US border tax proposal in a move that could trigger the biggest case in World Trade Organisation history.
Over the past few months interest rates and the value of the dollar have risen sharply, and monetary policy’s quantitative indicators have contracted. These monetary restrictions have worsened the structural impediments to U.S. economic growth that existed before the election and continue today...
"We have argued the current monetary regime is in its evanescence, and that the Fed is trying to raise rates to attract global wealth to dollars and dollar-denominated assets as global leverage, demand and output growth declines. If we are right, then we should not expect other economies to sit by idly... which keep us cautious on equities, bullish on Treasuries and gold, and negative on credit:"
Trump has accused Germany of not doing enough to increase its imports while having such a sizable trade surplus, and in October, the U.S. Treasury Department listed Germany as a country to watch because of its current account surplus. So is a trade war with the U.S. next?
The Inauguration of the billionaire property developer and businessman Donald J. Trump as the 45th President of the United States has ushered in a new era in American politics and international standing.
"While respecting the American people and distinguishing between them and the hostile policies of the U.S. government, Iran will implement the principle of reciprocity until the offensive U.S. limitations against Iranian nationals are lifted," an Iranian Foreign Ministry statement said.
Global export of goods (priced in US dollars) has collapsed in Japan, the EU, and emerging markets, since their recovery highs following the great recession. The US is the best of the lot, but US exports of goods are down substantially as well. What’s behind the move? Is it protectionism? Currency related?
We have an economic crisis - centered on the persistent elusiveness of real growth, rather than just monetized debt masquerading as 'growth'; and a political crisis - in which even ‘Davos man’, it seems, according to their own World Economic Forum polls, is anxiously losing his faith in 'the system' itself.
Faced with a Tweeter-in-chief, how are investors to navigate what’s ahead? Is there a strategy behind President Trump’s outbursts; and if so, how shall investors position themselves to protect their portfolios or profit from it?