possible side effect of tariffs and trade wars

[Millhouse]

There is one possible side effect from Trump's trade wars and tariffs he started up this year. And it is a positive one too (IMO).

First this isn't a Trump defending thread. This is purely about his trade and tariff policies and how it could effect the end of our booming bull economy.

Link is below, but the renowned investor Jeremy Grantham predicted the last two major bubble bursts of the dotcom and housing markets. So this January, he was quite sure this 9 year run of the bull market that is constantly going up causing a bubble will crash hard at some point. However he changed his mind once Trump started the tariffs and trade wars due the speculation it has injected into the market. Instead he said the market wont crash with a bang, like a possible 50% crash, but instead will probably now do so over a longer period of time in increments as a whimper. Of course nothing is ever certain, but he does seem to know what he is talking about.

Anyways it was an interesting read for those interested in the economy and how Trumps tariffs and trade tactics can effect it in the longer term.

https://www.msn.com/en-us/money/savingandinvesting/the-legendary-investor-who-predicted-the-past-2-bubbles-breaks-down-how-the-9-year-bull-market-will-end/ar-BBLZVme?li=BBnb7Kz

[fredtoast]

(08-17-2018, 02:20 PM)Millhouse Wrote: There is one possible side effect from Trump's trade wars and tariffs he started up this year. And it is a positive one too.

Grantham does not say it is "positive"





While many pundits have decried Trump's trade escalation as heavy-handed and potentially damaging to the global economy, in an ironic twist of fate it may have saved the US market from a painful explosion.

But to hear Grantham tell it, that may not have been such a good thing.

"It's a pity, because we know how great bull markets and great economies end," he said. "They traditionally end with a melt-up and a blowup. What about when that doesn't happen? Who knows? We have no experience of a decadelong bull market fizzling out. Here we are, in no-man's land."

[Millhouse]

(08-17-2018, 02:28 PM)fredtoast Wrote: Grantham does not say it is "positive"





While many pundits have decried Trump's trade escalation as heavy-handed and potentially damaging to the global economy, in an ironic twist of fate it may have saved the US market from a painful explosion.

But to hear Grantham tell it, that may not have been such a good thing.

"It's a pity, because we know how great bull markets and great economies end," he said. "They traditionally end with a melt-up and a blowup. What about when that doesn't happen? Who knows? We have no experience of a decadelong bull market fizzling out. Here we are, in no-man's land."

I said it was positive, imo that is. Eventually the market that has been on the rise for 9 years will crash at some point. Maybe I am wrong, but a gradual whimper of a crash seems better than an overnight bam kick us in the nads kind of crash that he was becoming more sure would happen until this year.

The bolded is the journalist's reference to him saying there is no precedence for a bull market like this to whimper instead of crash. 

[Benton]

(08-17-2018, 02:28 PM)fredtoast Wrote: Grantham does not say it is "positive"





While many pundits have decried Trump's trade escalation as heavy-handed and potentially damaging to the global economy, in an ironic twist of fate it may have saved the US market from a painful explosion.

But to hear Grantham tell it, that may not have been such a good thing.

"It's a pity, because we know how great bull markets and great economies end," he said. "They traditionally end with a melt-up and a blowup. What about when that doesn't happen? Who knows? We have no experience of a decadelong bull market fizzling out. Here we are, in no-man's land."

I take it that he's referring to not being a good thing for investors.

Huge meltdowns aren't necessarily bad for investors. When the market hits bottom is the best time to invest. But a long steady decline? It gets harder to predict when will be the best time to buy.


I'm a fan of  tariffs. I think Trump did well there. Congress dropped the ball, though, in that it could have increased taxes to businesses, but provided some breaks for employing locally or using local goods or services. As it is, increased tariffs likely won't have a huge positive impact as US companies will just pay more to keep cheap labor over seas, passing the cost on to consumers.When their profit margins drop, they'll blame it on the tariffs and they'll get dropped in the name of being business friendly.