What is Trump's self-positioning? What is the ultimate goal of Trump's trade war? When can dollar risk assets start to buy the dips?
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First, the conclusion:
Trump's self-positioning: I believe he first positions himself asthe chosen debt resolver of America, and the second role issavior of the poor in America
Trade war: From a "blitzkrieg" to a "prolonged war": Trump might have originally planned a "blitzkrieg", but after China's unexpectedly tough response, he was forced to switch to a "prolonged war", which may become unexpectedly brutal (refer to the historical Qin-Zhao Changping battle)
Dollar risk assets:
1. Aggressive buy the dips: If you believe Trump's ultimate core purpose of the trade war is to achieve "fairness",then gradually consider buying the dips:
2. Cautiously hold cash: If you believe Trump's ultimate core purpose is to "break the K-type structure where the poor become poorer and the rich become richer, and adjust the US industrial structure (increase the proportion of the secondary industry and reduce the tertiary industry)", then I recommend keeping more cash positions and being cautious, don't buy the dips yet
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and meaning while translating to English.]However, the downside is that while the salaries in finance and information technology are indeed very high, this is ultimately a game for a few elites, and the vast majority of ordinary people cannot participate in this globalization feast
Perhaps this is why Trump had strong support in the US election, representing those ordinary people abandoned in the process of globalization
I think, by this point, everyone has a sense of it. I believe the essential idea of the Republican Party represented by Trump is:
Adjusting economic structure at the expense of total factor productivity in the US and even globally (increasing manufacturing backflow, raising the proportion of the secondary industry) -> Bringing more factories back to the US -> Allowing more middle and lower-class Americans to be allocated more social wealth -> Breaking the K-shaped structure
From an overall perspective, many economists oppose Trump, believing this is going against the trend, abandoning being a financial and technological powerhouse to become a manufacturing powerhouse
But if you look internally, you might understand why Trump could win the election, and why he would choose manufacturing over high-end finance and IT
So, my overall view is relatively pessimistic. Trump, in order to care for ordinary people left behind by globalization in recent decades, doesn't even mind damaging the total factor productivity of the US or the global economy
In this context, the trade war is unlikely to end quickly and has gradually transformed from a "blitzkrieg" to a "protracted war". Global economic growth rates should be downgraded, and consequently, the valuations of all risk assets should also be downgraded, meaning stock prices should also be lowered
US stock market declines or pullbacks generally have two underlying reasons:
1. Unexpected liquidity impact, with the possibility of a V-shaped reversal if the FED comes to protect the market: The most typical example is the sudden bankruptcy of Silicon Valley Bank in March 2023. In such cases, most assets' profitability is not significantly problematic, and the fundamentals are still quite good. If the FED steps in to prevent forced chain liquidation of financial leverage, the game can continue. Therefore, people can see these assets performing a V-shaped reversal after the FED intervenes
2. Systematic changes in fundamentals, not closely related to the FED. Unless the US-China trade war eases, the probability of a short-term V-shaped reversal is relatively small: I believe this is more about the complete termination of global globalization over decades, leading to systematic changes and re-evaluation of the US and global market fundamentals. Unless Trump completely revokes tariff policies and continues his "savior of the poor" approach, it will be difficult to see fundamental changes in the short term
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Conclusion: As previously said, history tells us: If goods cannot cross borders, what might cross borders instead could be military boots
(PEACE AND LOVE, may the world be peaceful)
