While many might have hoped for it, the only law Trump didn’t put among his executive orders was one mandating the purchase of Bitcoin.
We have undoubtedly entered a new era – whether for better or worse depends on one’s perspective. I find reassurance in the apparent return of common sense to American politics, where economic policies are grounded in pragmatic considerations rather than ideology. This isn’t to say every decision will be agreeable or without flaws, but it’s comforting to know that economic decisions and outcomes will be evaluated through the lens of fundamental data, free – at least for now – from the distractions of divisive social agendas.
As I’ve highlighted in previous reports, the divide between U.S. and European economic strategies is widening. While Europe struggles with ideologically based policies, America’s direction under Trump is clear. Clarity—regardless of whether one agrees with the approach – is invaluable for investors.
The U.S. is doubling down on fossil fuels, a cornerstone of its economy.
Trump has made it clear that increasing energy production and reducing costs for American businesses and individuals is a top priority. However, the anticipated or eventual drop in energy prices won’t be straightforward. In addition to typical geopolitical tensions, Trump is going to take aggressive measures to limit exports from “naughty” producers like Iran and Venezuela. While his aim is to keep energy values depressed, such actions could set the stage for a contentious and volatile few months in global energy markets.
Another sector worth watching is the automobile industry. Although vehicles are a significant U.S. export, imports of foreign cars have surged in recent years. Trump has expressed frustration with the tariffs imposed on American vehicles, particularly by the European Union, and is determined to rebalance this trade disparity.
“Trump’s Tariff War” is poised to become a defining feature of the coming years, and German, French and Italian automakers could bear the brunt of his focus, in his negotiations with the EU, who relies on the U.S. for over 22% of its total exports.
Domestically, Trump’s tariffs may disrupt the supply chain for American car manufacturers, particularly with Canada and Mexico, which supply many essential components. That said, his ultimate goal appears to be forcing these companies to relocate production to the U.S. Whether this strategy will succeed remains to be seen, but it is clear that the automobile sector will face significant shifts under Trump’s policies, and that is without his preference for non-electric vehicles.
For most commentators and investors, the critical factors to watch are inflation, interest rates, the dollar’s value, and the performance of the U.S. stock market. Implementing Trump’s ambitious policies will undoubtedly require significant spending, raising concerns about the country’s already enormous debt. However, with only four years to achieve his goals, Trump is likely to move quickly. His flurry of executive orders immediately after taking office signals that rapid changes are on the horizon.
So, if successful, the American debt could start to decline sooner than expected. Inflationary pressures are likely to arise from some of Trump’s initiatives, but these may be offset by lower energy costs and increased investment inflows.
Under Trump, the U.S. is poised to become a more attractive destination for global investors than Europe, keeping the dollar strong against the Euro. And we can expect economic growth likely to take centre stage as the primary focus.
The speed and scale of Trump’s policy changes may take time for analysts to fully grasp. Unlike his first term, which was mired in unprecedented opposition, Trump now enjoys a more favourable political environment and greater experience, giving him a clearer path to achieving his objectives.
As a businessman, Trump brings a perspective unfamiliar in many western economies traditionally managed by career politicians. This should bode well for America’s future, offering the potential for innovative strategies and decisive action. However, investors should be prepared for periods of uncertainty and volatility as these sweeping changes take effect.
In conclusion, the next few years under Trump’s leadership promise to be transformative, with significant implications for the global economy. While challenges and risks lie ahead, the clarity and focus of U.S. policies provide a compelling narrative for investors seeking opportunity in an evolving landscape.
Finally
A few weeks back we suggested buying a few commodities; Soybeans, Wheat and Copper, products we could speculate in which were less prone to react violently ahead of Trumps inauguration. All have performed admirably since, and whilst the current rallies may continue, we will be raising protective stops to stop the gains running into losses and will also start looking for levels to cash out over the coming week or so.
We are also interested buying sugar, and possibly buying cable, looking for a short-term correction.
The post A New Era for American Politics and Economics first appeared on JP Fund Services.
The post A New Era for American Politics and Economics appeared first on JP Fund Services.
The post A New Era for American Politics and Economics first appeared on trademakers.