It's only a matter of months since I posted this video that predicted that Trump would crash the US economy, quite deliberately:
Now, it seems that I was right. Trump is crashing the US economy, which has finally woken up to the reality that he is a massive threat to the fortunes of those who have saved in the US stock market, as well as to all other Americans and many more outside that country.
As the FT notes today:
Stocks dropped for a second day as investor concern mounted over the health of the global economy amid President Donald Trump's erratic tariff regime and fears of a US slowdown.
Chinese, Japanese and Australian stock markets all fell on Tuesday.
On Monday, the US market saw significant falls, with the Nasdaq Composite down 4 per cent — its worst day in two and a half years — while the S&P 500 index tumbled 2.7 per cent over fears of the economic impact of Trump's global trade war.
I could see this was going to happen.
Why couldn't those entrusted with managing the world's money do so?
And why, if this is happening, did so many of the most prominent players on Wall Street line up to support Trump last November? Could it be that I was also right, and this is a conspiracy from which only the wealthy will win?
I got the first part of my prediction right.
I fear I might be right about the second part as well.
We are in for a rocky ride.
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Perhaps the problem with Wall street is that they are only interested in finance and not economics and naively thought proposals for tax cuts and deregulation would work wonders? Any sane person would think Trumps policies were very, very stupid!
By seeing the markets devalue, the rich are going to have field day of acquisitions, picking up distressed assets and the rest.
Whilst many of us will smell fear, they smell opportunity. This folks is actually market making.
If you have stop losses that automatically exit positions that you trail behind stock market gains, then when a crash happens your position gets liquidated and you then aim to buy in at a lower level and benefit from the backswing…
Those of us less ready to actively trade, who perhaps have a portfolio to hold which diversifies as advised, are still significantly affected by market-wide crashes.
It seems logical, then, that the net effect of this may be a net transfer of wealth from investors who invest in companies based on fundamentals to hedge funds and others who don’t care at all about the core value of the company and who only care about technical indicators and market-oriented strategies?
…. and it’s only just begun.
A lot of sound and fury in the press but the S+P 500 index is down just 10% from the highs after a 15 year run where it went up almost 10-fold. Plenty more downside, I suspect.
Bond markets are beginning to price in Fed rate cuts…. but I wonder what inflation data will be like tomorrow? I suspect that it won’t be good – tariffs might not have yet “kicked in”… but domestic producers will be hiking prices already; why? – because they can!
Agreed
King Don is a bully, interested only in forcing people/nations to be supplicants to him. He is not interested in the long term consequences of his actions.
Yeah, stocks are going down in the United States, but Treasury bond yields are going up. I thought US treasuries would be a flight to safety in a down market. That doesn’t seem to be happening today. It seems like treasuries are being stole too. What gives?
Last time I heard Treauries were going down….
There’s a lot more to the health of the economy than whether rich people are losing money on the NASDAQ and on their S&P trackers
I suspect there’s a lot of pre planned shorting going on, especially as retail buyers get more and more nervous and start to sell. The plan could be drive the market down by economic harm eg tariffs, short it by proxy and then suddenly lift the tariffs and buy the dip. Kind of overt insider trading. Either way I am now that cynical and think it’s solely about self enrichment
Hanlon’s Razor?
Personally I doubt that Trump has deliberately aimed at a crash in share prices, largely because he moves in a circle where share prices are regarded as a symbol of machismo. Nevertheless it has been obvious that his actions as President were likely to have that effect.
As a side comment, I was very struck by a comment of yours some time ago that buying shares is not investing in business – those shares are second hand and the company does not receive any increase in value. Obviously true once pointed out. However it raises a big question that perhaps you could address in a future educational piece: in practice the level of shares does matter, both to an individual company and as an effect on the entire stock market, so why is this?
That is in my video list now- but I don’t promise when.