Dear Reader,
We got hundreds of questions about tariffs last week, so I wanted to take today to answer your biggest questions.
===My Top 3 Tariff Trades===
Since so many of you have asked, I just put my top 3 tariff trades into a new special report, “3 Tariff-Proof Investments.” [Get yours here.]
Tariff-Proof Stock #1: Palantir’s “All-In” in this Microcap
Tariff-Proof Stock #2: Biggest Bargain on the Market
Tariff-Proof Stock #3: New partnership for this cancer gamechanger.
There are times to sell, and there are times to buy.
Here’s how you tell the difference >>>
===
Friday, we saw China slap 34% tariffs back on U.S. exports to China.
And we saw what happened to markets Friday. Not great.
So, some of you have asked…
Q: What do we sell to China?
It’s quite a bit…
We sell soybeans, oil, cars, aircraft, fruit, grain, seed, nuts, drugs, beef, plastics… a lot.
And we have to really watch out here because if Trump gives work-around protections for red states – farmers, for example, who sell soybeans to China…
Then you have an executive picking winners and losers in a trade war, which is not where you want to be – that’s very Stalinist. We have to keep a close eye on that.
Q: Do the tariffs overall make sense?
Yes and no.
Yes, it makes sense against China. As I’ve said here before, this can all be traced back to China.
Free trade worked very well for us post-WWII.
Averell Harriman, George Marshall and Harry Truman implemented the Marshall Plan that put us at the center of the free trade universe.
There were no patsies. That was the original America first plan. They put us right at the center of a global trading empire.
These guys weren’t idiots.
But then we let China in – that was stupid.
We let China into the World Trade Organization – a communist country with a planned economy that basically came in to screw us…
There’s proof of that in the Chinese Communist archives.
A better approach would have been to work with our allies to create a unified approach against China.
But, putting that aside, what’s extraordinary is that these tariffs were not reciprocal for U.S. goods – they were based on the trade deficit each country runs with us.
And that makes very little sense to me.
There’s a lot of poor countries out there we slapped big tariffs on that simply can’t afford American goods.
Take Bangladesh, for example.
Are we punishing Bangladesh because we buy their wheat, and they can’t afford to buy Teslas from us? They’re not rich enough?
That’s a little strange.
The other thing that’s weird is, again, as I said last week, not all trade is created equal.
Someone could sell a trillion dollars’ worth of couches with a 10% profit margin and make $100 billion…
Where we could sell a half a trillion dollars’ worth of software to them with a 30% profit margin and make $150 billion profit.
On the surface, there’s a half-trillion-dollar trade deficit, but who would you rather be?
The country that makes $150 billion? Or the country making $100 billion?
Obviously you’d rather be the U.S. with 30% profit margin goods.
It really incentivizes our trading partners to punish the most-profitable goods we export…
Software services, iPhones, Teslas, etc.
Here’s a very common question I got Friday –
Q: How bad was Thursday’s drop, historically speaking?
Well, only six times in history has the S&P 500 fallen more than 4% in a day while the dollar also fell more than 1%.
Usually, the greenback is a reserve currency, but people rushed out of the dollar, which really caused super panic selling.
Because, why are people leaving the dollar?
Remember – if trade stops happening in Mercedes-Benz, for example…
If they used to sell $20 billion worth of cars per quarter to America they’d take those dollars and might build a factory in Mexico and use the rest to buy U.S. bonds.
That has kept our interest rates low.
But when foreigners stop buying U.S. assets, the dollar goes down.
When they stop building U.S. factories, the dollar goes down.
Trump’s idea that they’re going to build factories in America is not proven credible when we see the dollar fall – it tells us money is fleeing the country.
Q: How bad will the tariffs ultimately be?
The biggest threat in my mind is the conflicting messages.
The challenge now is that business is frozen in place.
Do they build now, or not?
Because Trump changes his mind and you get mixed messages.
If business doesn’t believe Trump will stick with his tariffs, the investment required to spur this “domestic nirvana” is not going to materialize.
Businesses will freeze in place.
If they do believe him, markets will crash because Trump’s tariff scheme will make us poor over time…
Lower growth, higher inflation, etc.
Here’s the wild card:
Trump has done these tariffs under executive authority, national emergency.
They’ve never been used like this before.
So this could be turned around or nullified by a court order.
This is another reason businesses will freeze in place.
One Florida company has already filed a suit saying you can’t use your executive authority this way – your emergency powers act to deal with something that’s clearly not an emergency.
So, Congress has the authority over tax, spend and tariffs but they’ve pushed out this authority in a lot of ways to the Executive.
Remember – our founders created an adversarial system of government with three co-equal branches.
You have the Congress, the Judiciary (Supreme Court, etc.) and the Executive.
The idea is that these three branches are going to fight for power.
Now, Trump has come in with what we call the “unitary executive theory of government” which hasn’t been around since Nixon.
Congress reasserted authority after Watergate and this battle has happened back and forth.
Remember after the Civil War, the executive, Lincoln and then Grant afterwards, had a lot of power.
After 1870, Congress reasserted and was running the show.
Congress has the authority to tax and spend, and what are tariffs but a tax, basically?
The president really doesn’t. So this could all get shut down by a court order tomorrow.
And then what?
Then you probably have some of the best bargains on the market right now.
I’m starting to see stocks come into a nice strike zone to swing at, and I’ll be talking about some of these opportunities this week.
Tidak ada komentar:
Posting Komentar