Saturday, October 13, 2018

STOCK MARKETS FALL ON TRADE WARS

The stock market has fallen from its high point. The 7% fall in stock values isn’t unusual. For instance, a 6% fall occurred in January-February 2018 before an uptrend resumed.

A lesson: one has to accept that stock investments are risky.

But one should also ask a question: why the recent plunge these past two weeks? Analysts are pointing to a couple of factors:

First: trade wars. The outcome is unpredictable.

Second: interest rates are on the risk globally.

As a stock market watcher and participant, I see that Trump called the “Forward March” Trade war on China, the world’s second largest economy. The ensuing back-and-forth imposition of ever-higher tariffs has upset a mutually-beneficial equilibrium. The war has harmed and will harm the financial interests of American consumers (your budgets will buy less as prices rise). The war’s already hit the stock values of companies in which you might be invested.

Trump has intervened in the business of the independent Federal Reserve Board, calling out that it’s “gone crazy” and “loco.” The “Fed” staff and governors are experts and don’t need lectures of this sort.

Trump’s “wonderful economic initiatives" reportedly also include an exhortation to “print money” to lower the national debt. That remedy would have the lamentable consequence of devaluing the dollar supply and relative value of workers’ retirement accounts. 

The current stock market uptrend began in 2009. Obama was president then. In reality, Trump is coasting on Obama’s successes. Trump’s chaotic trade wars put us all (Americans and all other human beings) at higher economic risk.



Please read the disclosure:  Neither Darrell Reeck nor Growing Green Two Ways is a registered investment adviser. Financial information published here is educational only. All investments involve risk. Before investing consult your registered investment adviser. Writers and the blog disclaim responsiblity for loss in connection with use of information posted here.

No comments: