Gordon T Long, Co-Founder of MATASII.com sat down with Mish Shedlock to get his views on what the new Trump Administration and its “Trumponomics” policies will mean to the markets and investment strategies in 2017.
Here are a few of Mish’s current views on some of the Key Economic Platforms of “Trumponomics”:
POLITICAL DISRUPTIONS & DESTABILIZING EVENTS
EUROPE: “Trump wants Europe to pay more on its defense as he hasn’t changed his position on NATO.”
MEXICO: “Trump is adamant he is going to build this wall”
CHINA: “Trump is going to start a trade war with China – that is pretty clear as he sees them as a currency manipulator.”
EMERGING MARKETS: Current Fed Policy and the resulting strong US$ are “just clobbering emerging markets”
IRAN: “Trump has promised to renegotiate the deal with Iran!”
“I don’t see all this Infrastructure occurring …. at least in a hurry!”
WHAT WILL STAND IN TRUMPONOMICS WAY
Mish feels the following are going to stand in the way of Trump’s plans:
ANTI-GLOBALIZATION & PROTECTIONISM
“The big story here which everyone is missing is the big change in attitude towards Globalization.
GLOBAL TRADE BUST TO DRIVE ANOTHER DEFLATIONARY SCARE
Mish observes that “the dollar is ahead of itself, treasury yields are ahead of themselves and they are pricing in this massive inflation here that I don’t think we are going to see, at least in the short term. I think there is another deflationary scare coming up first because of a global trade bust. There are some pretty severe deflationary undercurrents occurring and a collapse in global trade is a real possibility!”
GLOBAL MACRO PICTURE TO MISH “LOOKS PRETTY AWFUL”!
- Deflationary forces coming out of China with Mish expecting another major devaluation in the Yuan by China to stop capital flight,
- A Strongly Rising US Dollar which hurts US exports and Emerging Markets,
- A Collapse in Global Trade,
- Populist “Anti-Globalism” Fueling Protectionism,
- Major Elections Coming in Europe (Germany, France)
MISH SEES A US RECESSION AS A REAL POSSIBILITY
- Rising rates is killing housing,
- Manufacturing production has peaked,
- Services are falling “and could take the rest of the economy with it”.
“I think we are on the verge of another deflationary bust here.We will see if trade tips the scale, whether a rising dollar tips the scale, whether protectionism tips the scale or simply rising interest rates and fed rate hikes tip the scale. There a re a lot of things priced here into the stock market that all of this good inflation thanks to Trump – WE WILL SEE!”
View the complete dialogue in this 21 minute video accompanied with 26 slides.