Gordon Gekko: The April 2 agenda was overcrowded. It was not going to be easy to manage it. Not that Trump regrets, it’s very early for that. And they are his genuine ideas. Rather than cancel the issues of the agenda – which can be suspended today, but retake later – it is about emprolijar it. Avoid the chaos of the marches and countermarkers …
GG: It is a matter of image, too. But, even so, it will continue to improvise. It is in the genes. Only that, in a more orderly way, perhaps of one issue at a time, as well as to acquire a better knowledge of its specific effects. On Monday, by case, Trump brought the novelty of a 25% tariff for those countries that buy oil from Venezuela. It is a “secondary”, conditional tariff. An innovation.
Q.: Who specifically points to? Who bought oil from Venezuela, apart from the US?
GG: China is the main recipient of the measure.
Q.: All the tariffs that are advertised and then apply, the two things together – that is, the tariffs that are not in nothing – advance fully against China.
GG: Strategic confrontation with China is the Leit motiv of all this revolution. Sometimes, jump to the forefront, and become very visible. But concern is always present, even in the background. Trump says he will impose tariffs on “cars, pharmaceutical products, aluminum, steel” and clarifies, all products that the US will need “on the occasion of a war or other problems.” It is clear that the Panama Canal, Greenland, Canada, are on the table, for the same reasons. Strangely to seem. National security is the code phrase.
Q.: But, at the same time, the last days, a less aggressive president was seen. There may be flexibility, he said Friday. Moreover, “there will be enough flexibility” when the reciprocal tariff regime is applied. What happened to the Trump Verador, who did not admit exceptions?
GG: Trump is a businessman. And his specialty is negotiation. So the rigidity, inflexibility, punch on the table … all that is just the starting point.
Q.: Do we already enter the second phase, that of open negotiation?
GG: No. You still have to reveal many proposals. The reciprocity regime, what is going to be done in sectors such as cars, wood and pharmaceutical products, treatment with the European Union, the role of NATO, the management of international organizations. Will exchange swaps lines of the Fed continue available? Under what conditions? It is true that yes, the fate of Tik Tok is being negotiated with China. From before Trump assumes. And what advanced quickly was the discussion on the Panama Canal. A group of US investors led by Larry Fink in Blackrock closed the purchase of a set of ports controlled Hutchison, a Hong Kong firm. And this includes two ports in the channel area. Everything is agreed, it would be a solution for Trump, but China presses Hutchison to turn back.
Q.: Do you think the president is aware of the damage that his policy generates in terms of uncertainty, loss of confidence within the US and reputation of the country in the world? Or will you need a recession to realize?
GG: Scott Besent, the Treasury Secretary, is not an improvised. Know the markets to be left over, and their connection with the economy, although it has no experience in the government. Besent is the one who is going to tell Trump to loosen when he sees the recession closely.
Q.: They are interested in avoiding it, then. They are not indifferent.
GG: Of course, although they do not want to admit it to give more hardness to the speech. Given the rough agenda that they resolved to promote, I also do not believe that the negative consequences are a surprise. Moreover, I would say that one expected a exchange crisis as a probable counterpart of the application of tariffs for 20 extra percentage points to China.
Q.: There is a commercial war and there is no coin warfare.
GG: That gives more space to replace tariff policy. The reaction of Europe – the sudden German leadership and the brand new coalition of the European Union and Great Britain to take over the continental self -defense – operates in the same direction. We saw a euro falling to parity with the dollar, and is 7% or 8% above. In the previous roles, a sea agreement was mentioned even to Lake – a kind of 1985 Plaza Agreement – to negotiate that the rest of the G7 promotes a fiscal expansion in exchange for stopping the super dollar. And it was not necessary. Germany, that is, Europe, already revoked the limits of its public debt. China is embarked on a new stimulus package. And you will have to reinforce it to achieve your goal of growing 5%. But, above all, the dollar never reheated. And neither had a gun to anyone to buy treasure bonds, and put a roof to the rise of long rates. It is the other way around.
Q.: That does not mean that everything is going well and better than planned. Or yes? The recession installed its silhouette in all forecasts. Consumer expectations, says The Conference Board, sank 15 points below the usual threshold in a recession.
GG: Trust was destroyed. And there is an obvious economic slowdown. But, the March data, the first information of the activity, rebounded. It is the best of what is going, which is not too much, but it is encouraging. If Trump does not start to break everything, if it will be flexible, as he said; He will take vigor from expansion, he will add a few tenths to inflation, but he should not push us a recession.
Q.: If the recession can be overcome, maybe the bag has already made a floor.
GG: Trump depends. When he calms down, it is clear that the problem is him. Institutions and Hedge Funds believe it is early to take more risks. It is the retail investor who is buying the DIP, the crouched.
Source: Ambito
