Make Depressions Great Again

Posted on April 25, 2025 by MN Gordon

Trade tariff policies continue to drive uncertainty in financial markets. Stocks, bonds, and the dollar itself move to the daily words of Team Trump.

Are extreme tariff policies one of President Trump’s ‘art of the deal’ tactics? Or is the ground shifting beneath the feet of the global economy and financial markets?

This week, to the stock market’s delight, was all about damage control. Treasury Secretary Scott Bessent, while delivering remarks at the Institute of International Finance Global Outlook Forum, clarified that “America First does not mean America Alone.” This came a day after Bessent stated that the ongoing tariff showdown against China is “unsustainable” and that he expects a “de-escalation” in the trade war.

When you play with fire, you’re gonna get burned. In this regard, the initial damage has already been done. But, of course, there’s always more to come.

According to Port Optimizer, scheduled import volumes for the Port of Los Angeles for the week ending May 3 show a 28.53 percent week-over-week decline. What’s more, for the week ending May 10, scheduled import volumes are projected to be down 34.54 percent year-over-year. Continue reading →

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Trumpism and the Fading Dollar

Posted on April 18, 2025 by MN Gordon

“You put the lime in the coconut, you drank ‘em both up.”

– Coconut, Harry Nilsson

Breakdown and Reordering of Trade

The breakdown and reordering of global trade via President Trump’s tariff policies will have many consequences. Long established trade relationships come with mutual dependency. Abruptly severing or restricting these ties will yank the rug out from under how people the world over pursue their livelihoods.

America imports and consumes massive amounts of goods and products Made in China and other Asian countries. Trump’s trade tariffs put the export driven economic models of these countries at extreme risk.

America accounts for over 30 percent of the world’s consumer spending. Should tariffs limit the ability for countries to export goods to America, they will be left with a massive supply glut. Thus, they will have two options: Increase domestic consumption. Or decrease production.

Certainly, it is more favorable for these countries to increase their domestic consumption. The alternative is widespread layoffs, skyrocketing unemployment, and a deep recession. But increasing consumption is easier said than done. Continue reading →

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Trump Plays with Fire

Posted on April 11, 2025 by MN Gordon

Bear markets are for the patient few. Those who can resist the countless occasions to lose money. With each bounce comes an opportunity for investors to buy higher so they can later sell lower.

Major U.S. stock market indexes continue to deliver whipsaw results. The selloffs are abrupt. While the bounces come with incredible vitality. The timing can be tricky.

Dip buyers pile into the rallies and attempt to trade the swings. Others see what look to be discounted share prices. The apparent deals are too good to resist.

Some investors, having succumbed to emotions of greed and fear, have repeatedly destroyed their capital over the past week buying before the selloffs and then selling before the rallies. What to make of it?

Maybe the stock market’s freefall on the heels of President Trump’s Liberation Day tariffs was merely a burp. Maybe Trump’s subsequent 90-day pause of reciprocal tariffs on every country except China will boost the major stock market indexes past their all-time highs from January. Continue reading →

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When Bank of Mom and Dad Goes Broke

Posted on April 4, 2025 by MN Gordon

Rising consumer prices, rising unemployment, and a slowing economy are telltale signs of stagflation. This is the ugly scenario that is unfolding before our very eyes. Where a person must work more to get less. And that’s if they don’t lose their job.

The Federal Reserve’s preferred inflation indicator, the personal consumption expenditures (PCE) price index, recently showed consumer prices increased at an annual rate of 2.5 percent in February. If you exclude food and energy, the PCE price index increased at an annual rate of 2.8 percent.

Of note, the latest PCE price index does not include price hikes from Trump tariffs. Those price hikes are forthcoming. Moreover, the additional costs of Liberation Day tariffs will most definitely compel consumer price inflation higher.

For example, all goods made in China will now be subject to a 54 percent tariff. So, if you shop at Walmart, Target, or any other store that stocks its shelves with goods from China, you will be paying much, much more.

Of course, rising consumer prices always come at the worst possible time. And this time is no exception. Right now, consumers are tapped out. Continue reading →

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