Chart of the week: Is The ‘Trump Trade’ now a ‘Trade War’ against Wall Street?

March 29, 2018

27 March 2018

Bob Cunneen, Senior Economist and Portfolio Specialist, NAB Asset Management

US asset prices since President Trump’s election


Source: US Federal Reserve, St Louis

President Trump’s election in November 2016 had been a magic elixir for Wall Street. The ‘Trump trade’, cutting the corporate tax rate from 35% to 21%, saw US shares initially surge by more than 30% (black line) to peak in January 2018, as measured by the S&P 500 Index.

However the US dollar was more sceptical on this ‘Trump trade’?  The USD has been falling since early 2017 and is now -4% below the level of November 2016 (red line). This is partly due to better economic data in global markets and also lingering concerns over President Trump’s protectionist rhetoric with “America first”.

Wall Street is now realising the threat posed by President Trump’s ‘trade war’ agenda with a sharp 10% fall in US share prices since January’s peak.  The proposed tariffs on steel, aluminium and selective imports from China could damage corporate profits as well as the global trading system. Higher US inflation from rising imports prices could also accelerate the pace of interest rate increases by the US central bank.

While President Trump has promised that “trade wars are good and easy to win”, Wall Street is now considering these trade wars as likely to cause painful and prolonged economic conflicts.


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