For the last 6 months, he’s been POTUS, the least we can say is that you cannot be indifferent to what Donald Trump is doing. Having announced the withdrawal of the USA for the Paris agreement on climate change fired tons of criticism around the world. And yes, it may be the most stupid, outrageous and selfish decision ever made. Although if we dig we will probably be able to find many other stupid decisions made by state presidents, I’m sure. Yes, it may have dire consequences on the earth climate. However, the very interesting immediate consequence of almost every Trump’s decision is the faith of the markets in the future. The Nasdaq went up 0.78% on Thursday and a whopping 0.94% o Friday, bringing it up 17.14% year to date! The Dow Jones Indu Avge Index went up 0.65% on Thursday and 0.29% on Friday, bringing it up 7.31% year to date. Techs have definitely good winds!
The Street loves Trump! So, the question I had in my mind is: Is Trump good for America, and particularly for the financial America, or is it something else? Well, let’s face the reality, slashing expenses, taxing importations and stopping paying for various international treaties (NATO, UN, G7, Paris agreement, …) gives the signal to corporation that time to sell is there! It’s the short-term rally around hope in a great future for corporate America.
Step 1 of Trumps strategy done: Make Corporate America Great Again! But despite the smile I have watching my stocks going up, I’m not loving Trump for this. The explosion of the bubble that he created with his populist positions will soon explode, because, unfortunately for the USA, trees do not grow indefinitely and the economic pendulum will come back. When? I cannot predict. It may take 6 months, a year, more, but the next bubble blast is around the corner.
Accelerating the shift of power to the East
I love Trump because he’s opening wide avenues to accelerate the transformation of the other economies. He’s sending wake up calls to the rest of the world in a very direct way: « USA’s light is fading, grab your chance ». By continuing to play an American centric selfish game and wanting to « Make America Great Again », he’s isolating the US, alienating its people, and going backwards.
With his basic American centric thinking, he does not see that the world has dramatically changed. He may moan that German car industry is bad for the US, because he sees more Mercs, Beemers and Porsches in the street of New York City than Chevys, Lincolns or Fords. He forgets that those cars are manufactured in the US and the profits are reinvested in the US. As profits are taxed in the US, repatriating those in Europe will incur double taxation!
Sure, stopping direct foreign aid may hurt some developing countries. Some international institutions partially or totally funded by the USA will need to adapt. This is the life of any given organization, and for once, it’s a need to change faster and come up with new partnerships, new alliances and new ideas. With his American centric post-WW2 view of the world, Trump is accelerating its shift to a new order, with emerging economies leading the necessary transformation to a new era. Thank you Mister President, you have definitely buried the last hope of America leading the world! Time has come!