A few weeks back I wrote it would take a real idiot in charge to screw up the American expansion.
Today I will talk about tariffs and the possible idiot.
Have a look at this chart:
This trend change in tariffs is staggering. Even if reversed tomorrow, and it won’t, large corporations won’t trust the White House on policy. Yesterday, ‘Le Grande Orange’ started tweeting about Indian tariffs.
The tariffs are good for the consultancy industry, but large corporations are not going to have an easy time with this. Most will do nothing short term as consultants will take months to run scenarios.
Most likely, the tariffs are a trigger for a slow down in the US expansion. While the tariffs may not lead to a recession, they have already triggered some massive trend changes and new trends that will begin to show up in many new groups of stocks.
For example, most ‘experts’ think it will accelerate growth in many emerging markets.
So far, all is well with the S&P hitting more all time highs yesterday, and even the FANG stocks as an equal weighted group are back near all-time highs. The old trend (which I keep riding) is still our friend, but I have an extra toe out the door.
Whatever happens, Fat Nixon has already framed the ‘end of expansion/recession’ story as all about the FED and certainly not about the man he hired that is in charge of the FED or his tariff policy.