Journalist: President Trump is a tariff machine, companies are not very clear about what environment they will have to operate in a few more months and, nevertheless, the bag, after an impasse, climbs again. The S&P500 toys on the threshold of a new record. Long rates calmed down when they were the visible thermometer of stress. The same the dollar. European stock markets establish new maximums after Trump rescues Vladimir Putin from ostracism, and promises (implicitly) keep the territory he occupies in Ukraine. At the same time, vice president JD Vance, with a hypercritical home speech, in Munich, trizas the transatlantic alliance. How is it understood? Is this seriously? Is everything all right? Or is it simply a bluff?
Gordon Gekko: Of course, markets are not infallible. Keep in mind that you always reserve the right to change your mind without notice. They do not stop ruling, but yours is never a definitive position. And with Trump you never know what is brought in hand.
Q.: Is this random, perhaps? Long rates climbed more than one point when the Fed lowered its full point, from September to December. They had a very sharp vision. What makes them calm now?
GG: It is not random. Markets believe better what happens. All tariff increases ads are suspended, except for the 10 extra points that Trump applied to China.
Q.: A lot of noise and few nuts.
GG: In principle, it is so. And the magnitude of tariffs Trump Revolea is impossible to apply without causing a serious problem of functioning in the US economy itself.
Q.: Call more price and inflation increases.
GG: And serious supplies and logistics problems. Seen, what Trump announces are the terms to begin a discussion and the peremptory terms to sit at the negotiating table.
Q.: Isn’t it believed that you will touch the tariffs?
GG: The tariffs are going to rise, because it is interesting to increase the collection in that way in order to extend the tax reduction that expires in 2026. But the increases will be small, substantially lower than what is announced. And it is possible that in some cases they are changed to import fees. And surely there will be exemptions. In the conversation with Narendra Modi, the Premier of India, it was clear that if a part of the production in the US is based, the treatment will be different. It is a range of options.
Q.: Trump’s aggressiveness is for the gallery.
GG: It is the starting point for bilateral negotiation. It is clear, for example, in the announcement of the policy of reciprocal tariffs, which is a discussion that requires defining from the basic technical criteria to the negotiator teams. And that will not be done overnight either.
Q.: Hence the greatest tranquility?
GG: More is less. More ads, more ambitious, are less fulfilled. At least without hitting a shot on the feet. And we agree that the confession of the Secretary of the Treasury, Scott Besent, in the sense that what the administration wants is to lower the long rates complete the picture. Even Trump finished understanding that he needs inflation to fall to specify that logical aspiration. Before the political campaign carved, long rates fell alone with an economy growing at 3%.
Q.: It is not business to break anything, then.
GG: That’s how it is.
Q.: But Trump’s political agenda is very corrosive. And with her he won the choice and a clear mandate.
GG: The markets understand that Trump will not leave it, but he needs to dose it so as not to kill the golden eggs. An economy that grows thriving, an inflation that was reduced, but must still contract more, and an inclined fed to retake the loss of rates if Trump does not kick the loop. What markets quote today is that this compromise solution, which questioned in November and December, is a more likely horizon. Musk’s chainsaw, a factor not very taken into account then, entered the equation and the most viable turns.
Q.: And what tells me about the International Trump that punishes the US as always of the US such as Canada and Europe, and rescues the figure of Putin, installs the idea that crime (the invasion), pays; And thus calls into question the will of NATO and the strategic security of Europe …
GG: Are we attending the parition of a new international order? Markets do not specialize in geopolitics. Don’t ask them. European records in record favorably quote the probable peace in Ukraine. Spot. If Putin later will be tempted to repeat his adventure in a weakened Europe, with NATO in replication, that goes beyond his gaze (and his analytical expertise). Trump (the same as Putin, by the way) wants to disintegrate the European Union to negotiate a new set of conditions for coexistence. He could not achieve it in his first term. He is convinced, after listening to Vice President Vance in Munich, that now is the opportunity. It needs the electorates to lean more to the right, and that Europe is more “democratic” and accepts it.
Q.: Give the impression that we are playing with fire.
GG: Indeed. And if Wall Street does not chamusca, do not expect anything else. Politics is the one that leads, and the one that is taking us there.
Source: Ambito
