The words won an election. But now they need to translated into action. That’s the hard part. Words are easy. I know. I write them every day.
The trade wars are clearly coming.
Hence, I figured I’d avoid stocks impacted — Walmart, Boeing, Disney, GE — but then, I thought, who won’t be impacted? Even Whole Foods imports fruit and vegetables from many of those countries stealing American jobs, including Mexico.
Figuring who not to buy and who to sell is a totally fruitless exercise. (Nice pun, Harry).
Exports account for about 8.4% of total American economic output, according to the web site, www.worldstopexports.com,
Here’s the highest dollar value in American global shipments during 2015. Also shown is the percentage share each export category is.
8.4%. That’s a YUGE number. You mess with that and you mess big-time with the American economy.
Also you mess with my family’s diet. Look where the tomatoes we bought at Whole Foods yesterday came from:
I don’t think a lot of Trump’s BIG “policies” will be transformed into actions quickly. There are a lot of people in Congress who are uncomfortable with starting a trade war. We had one in the 1930s and it was a major economic disaster. The American economy only recovered after we got into the second world war.
In this uncertainty, we have four choices:
+ Buy more technology stocks, like Amazon, DISH, and Facebook. They’re doing well.
+ Do nothing. Watch. Try to make some sense out of all the bluster, noise and the fake “facts.”
+ Sell covered calls.
+ Sell stocks that are down 10%+ from where we bought them.
In the meantime, I keep reading and keep being more confused. But there was one article today in the Wall Street Journal’s MarketWatch that seemed to make a modicum of sense:
Investing legend Jim Rogers says dump stocks if Trump launches trade war
A veteran investor, who has witnessed several crises over the past half-century, is worried.
“There is a lot of optimism,” said Jim Rogers, chairman of Rogers Holdings. “People are focusing on the good stuff when it comes to [Donald] Trump,” he said.
But there is no telling what Trump will do once in office and that unknown bothers Rodgers the most.
“He very much wants a trade war. And if that happens, sell everything,” Rogers told MarketWatch.
By everything, he means U.S. stocks, which rode Trump’s coattails to record levels following his November victory on euphoria over Trump’s promises to cut taxes, eliminate regulations and boost infrastructure spending.
Some of that enthusiasm waned in recent weeks as doubts over Trump’s America-first agenda emerged although stocks held gains on Friday as Trump was sworn in as the 45th president of the U.S.
To be sure, Trump’s rhetoric has resonated with a large swath of U.S. voters who, rightly or wrongly, blame globalization for many of their woes.
“I know trade wars have always been disastrous. It leads to bankruptcies and has led to real wars,” said Rogers, speaking via telephone from his office in Singapore. “History has shown that no one has won a trade war and very few people learned the lessons of history. They ignore them because people think they are more powerful and smarter than people in the past.”
Trump swept to the Oval Office in part on antitrade rhetoric, including threats to slap China with 45% import tariffs and declare the Asian country a currency manipulator, sparking fears of escalating friction between the U.S. and its most important trading partner.
Analysts have cautioned that a confrontation between the U.S.and China could be catastrophic, likely dragging the global economy into a recession.
The famed investor admits that there is a chance that Trump may opt to focus on the positive changes he had promised such as lower taxes and deregulation.
“If he does the good things, then happy days are here again,” he said.
The challenge for the market is that no one knows what Trump will do once he’s in office, according to Rogers who co-founded the Quantum Fund with billionaire investor George Soros, a vocal critic of President Trump.
Still, Rogers said there is one asset that will shine no matter which Trump shows up at the White House-the U.S. dollar.
“This is a good time to add dollars,” said Rogers, who believes that the greenback will continue to rise through this year into 2018.
The ICE dollar index DXY, -0.37% a gauge of the greenback’s performance against a basket of six rival currencies, has risen 3% since Trump’s election.
Trump’s promise to pave the way for corporations to repatriate trillions of dollars parked abroad to avoid crippling taxes alone will ensure that the dollar remains firm even as Trump has indicated recently that the dollar may be too strong.
Steven Mnuchin, Trump’s nominee to head the Treasury, on Thursday attempted to clarify that the president was referring to the short term rather than the long view. But the Mnuchin’s efforts fell short of explaining how the president will reconcile his dollar-positive policies with his desire for a weaker currency in the near term.
“I’m not sure Mr. Trump knows what he’s going to do, he has contradicted himself several times,” said Rogers. “He speaks loud but his words are confusing.”
The one certainty that the markets can bet on, according to Rogers, will be more chaos under Trump, which may coincide with an economic turmoil on a global scale.
“We are overdue for a crisis,” he said, reiterating his steadfast view that debt levels across the world, including in the U.S. and China, continue to swell while interest rates are at historic lows.
But that grim outlook shouldn’t scare investors away, he said.
“The Chinese have a word that opportunity and disaster are the same so when there is a catastrophe, it is also a huge opportunity,” Rogers said.
Stuff:
+ There’s a truly awful cold running around. It sticks around for weeks. Everyone has it. Rules: Get a flu shot. Stay away from everyone. Wash your hands, etc. Never touch your eyes. If you get it, go on antibiotics. Sometimes it works. Stay away from folk medicine like chaparral.
+ TSA PreCheck is a must. Saves oodles of time getting through airport security. Saves hassles. No taking your shoes or belt off. Removing your computer, etc. Get it: click here.
+ Don’t use AOL or Yahoo for your emails. Totally unreliable. Get yourself a free gmail account.
When should I get into the marijuana business?
+ When it’s legal in your state.
+ When you’re already growing something, like grapes or corn.
Meantime, don’t invest in anyone else’s marijuana business. Too dangerous. Too illegal. Too many unsavory characters.
The new technology of driverless cars
Kelly was standing in front of Cohan’s Tavern when he saw a driverless car rolling slowly down the street.
He ran to the car, jumped in, and pulled on the emergency brake.
Kelly got out and very proudly said to the man approaching him, “I stopped it!”
“I know, you idiot!” said the man. “I was pushing it!”
Test your intelligence
Q: What’s the difference between a chickpea and a lentil?
A: Trump never paid to have a lentil on his face.
Harry Newton, whose tennis got rained out — again. This is meant to be “sunny” California. And all that’s happening is the streets are flooded and the drought is broken. This is The Liquidity Event that Californians have always wanted. Funny thing, the Obamas are out here on vacation. Even the golf courses are flooded.
Would you still recommend purchasing shares in SQ? It is hovering near its all time high. I’ve been watching it for some time, waiting for it to dip (time the market) and it’s not happening. How much higher do you expect the stock to go?
Harry,
Advising people to go on antibiotics is the worst possible advice you can give. We are approaching a crisis from antibiotic-resistant bugs which come from indiscriminate use of antimicrobials of all sorts. All of the major health organizations in the world are supporting what I am saying. And, at your and my age, this could trigger an over-infection of the bug C Diff (Clostridium difficile), which would quickly become the worst medical nightmare of your lifetime, short of cancer, and is often the final gotcha in many elderly lives.
No question that indiscriminate use of antibiotics is a disaster. But if you’re really sick and over 65, they seem to work. But obviously one has to be very very careful.