I happened to be listening to a photography YouTube this morning and noticed one by the economist Robert Reich nearby. The latter was an account of Donald Trump’s varied business ventures, from Trump Steaks to Trump Mortgage (which apparently opened its doors just as the domestic housing market was beginning its epic, multi-year collapse in 2007) to the “fraudulent” Trump University, the failed New Jersey casinos…–a staggering tale of business ignorance, ineptitude and, in my view, cruelty during a long period in which commerce in the US was generally booming. The Reich piece closed with the observation that had Trump simply put the money he inherited into an S&P index fund he would have far more than he does today.
Concerning as this may strike one, I’m not sure that the fact that Trump has so often been the dumb money is the country’s #1 worry. Rather, I think, it’s this singular lack of business acumen coupled with Trump’s fanboy attachment to white supremacists, Vladimir Putin, and industrialists backing him who need government influence to keep their empires from imploding.
Trump also appears to be in steep cognitive decline (the litany of his business failures suggests his marble bag was never brimming over), so J D Vance, someone we know little about other than his clear willingness to throw his constituents in Springfield, Ohio, under the bus for personal gain, may end up being the actual chief executive.
In other words, a big mess.
How do we protect ourselves from the considerable harm to the country that this duo appears to have in store for us?
I haven’t made up my mind, but taking off my hat as a human being and putting on my investing hat…
…if Trump is elected and is able to push his agenda–tariffs + tax cuts for his wealthy backers–through Congress, the immediate result will be a significant economic slowdown in the US. If he were successful in the (economically crazy) agenda of deporting non-citizen workers, the slump will be deeper.
…I think all this would trigger a significant rise in interest rates, as foreigners began to worry about the safety of Treasury bonds, making the economic situation worse. That would likely be accentuated to some degree by a fall in the dollar, as investors began to seek safer havens. Probably great for cryptocurrencies, as well as for Xi and Putin. For Americans other than export-oriented manufacturers, though, this would be the worst of all possible worlds.
None of this is the stuff bull markets are made of. At some point, export-oriented firms might become very interesting. On the other hand, electing a Hitler-wannabe doesn’t exactly burnish the “made in America” brand. So components might be the thing.
more tomorrow