Rolling coverage of the latest economic and financial news
Investors have also been digesting the consequences of a second Trump term.
The discussion around what trades work best with a Trump administration centers on three points, Bob Savage, head of markets strategy and insights at BNY, told clients:
Tax cuts = higher deficits. Trump policy shifts from the current government will revolve around taxes – expected to be lower thereby increasing the government deficits and borrowing needs.
Tariffs = inflation. Investors also fear the role of tariffs as they are expected to disrupt global trade and supply chains as they did in 2016-2020 with risk of inflation and less investment.
Deregulation = more lending. The markets also see Trump pushing for less regulation by government – leading to easier lending as capital requirements drop, along with more pressure on the FOMC to ease.
‘What I would call fragmentation of the world economy, the world economy sort of breaking up is not a good thing, it’s a bad thing… Tariffs is one of the things that can cause that sort of fracturing of the world economy…
Open trade really stimulates growth. Adam Smith taught us this, open trade is good for growth. Now, there are risks attached to it, and we have seen those risks, so there are obviously risks. We saw it with the impact of the Ukraine War, that if you’re overly dependent on one part of the world for something, obviously, if it gets disrupted, that can have a bad effect.
Continue reading…Rolling coverage of the latest economic and financial newsTariffs, tech and Taiwan: how China hopes to Trump-proof its economyInvestors have also been digesting the consequences of a second Trump term.The discussion around what trades work best with a Trump administration centers on three points, Bob Savage, head of markets strategy and insights at BNY, told clients:Tax cuts = higher deficits. Trump policy shifts from the current government will revolve around taxes – expected to be lower thereby increasing the government deficits and borrowing needs.Tariffs = inflation. Investors also fear the role of tariffs as they are expected to disrupt global trade and supply chains as they did in 2016-2020 with risk of inflation and less investment.Deregulation = more lending. The markets also see Trump pushing for less regulation by government – leading to easier lending as capital requirements drop, along with more pressure on the FOMC to ease.‘What I would call fragmentation of the world economy, the world economy sort of breaking up is not a good thing, it’s a bad thing… Tariffs is one of the things that can cause that sort of fracturing of the world economy…Open trade really stimulates growth. Adam Smith taught us this, open trade is good for growth. Now, there are risks attached to it, and we have seen those risks, so there are obviously risks. We saw it with the impact of the Ukraine War, that if you’re overly dependent on one part of the world for something, obviously, if it gets disrupted, that can have a bad effect. Continue reading…
