Business Mogul Hamish McRae Predicts Survival of Corporate World Amidst Trump Presidency
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Sticky situation: Financial markets disagree with pessimists looking at Trump's trade war's impact on global economy
It seems like the stock market might have a point regarding Donald Trump's trade war. The market recovery can't be ignored after the turbulence following Trump's "Liberation Day" on April 2nd. Here's a rundown of the market's resilience:
- America's S&P 500 index has bounced back by 14% from its April lows, though it's still struggling to break even for the year.
- The UK's Footsie has enjoyed a 15-day winning streak and is now 4% higher than its start-of-the-year level.
- Germany's Dax has nearly reached its all-time high, being only a couple of percent off.
Two key messages arise:
- US corporations, particularly big tech, show signs of incredible resilience. Exhibits (not exhaustive) include Apple moving its iPhone assembly to India and Microsoft reporting better-than-expected profits, boosting its market capitalization by 10%.
- World trade is anticipated to remain relatively unscathed despite the trade wars' chaos. Negotiations between parties seem to be focusing on preserving essential components of global trade, potentially even fostering a more durable form of globalization.
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As for the efforts to prevent trade wars from tanking global trade, a significant move came when China dropped retaliatory tariffs on a quarter of its US imports, including pharmaceuticals, aerospace equipment, and semi-conductors.
Politicians may keep posturing, but the mature negotiators are winning the trade game. Executives and entrepreneurs atop global companies are accustomed to dealing with recalcitrant governments, understanding their transient nature compared to their businesses' longevity.
There was a kerfuffle between Jeff Bezos and Trump over a report suggesting Amazon was considering including tariff costs in posted prices. White House anger ensued, with Press Secretary Karoline Leavitt calling it a hostile political act. Amazon denied it was a serious proposition. After a phone call between Bezos and Trump, the President announced that Bezos "is a good guy."
Were Amazon caving under pressure? It's doubtful. At 61, Bezos is worth $212 billion, significantly outranking Trump, who is 78 and estimated to be worth $5.1 billion. Considering who'll still be in the game ten years from now, the answer is clear: Bezos.
Tariffs will continue to exist, despite the disruptions they’re causing. The world economy indeed needed reform, evident in imbalances among countries like China, the European Union, and even the United States. While Trump's tariffs approach might not be the ideal one, reform was necessary.
Disruption is never pleasant for an economy, and there is a lot of it in the UK currently. However, it's far from the catastrophe the world experienced due to the pandemic. Businesses, big and small, managed to cope, and the markets indicate they will survive this economic precariousness as well.
If the markets are right, the world will experience a mid-cycle slowdown but emerge with a more robust economy in the long run.
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- In the face of ongoing trade wars and Donald Trump's unconventional methods, executives and entrepreneurs at the helm of global companies, such as Amazon's Jeff Bezos, prove their ability to navigate through recalcitrant governments, a testament to the enduring nature of businesses compared to the transient nature of political changes.
- The influence of finance and technology intertwine as companies like Apple and Microsoft continue to show resilience, with strategic moves like Apple's shift of iPhone assembly to India and Microsoft's better-than-expected profits boosting their market capitalization.
- Engaging in active business ventures and investments, whether through platforms like AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, or Trading 212, can help individuals capitalize on global trends and market movements, contributing to a more robust economy in the long run, even as the world economy experiences mid-cycle slowdowns due to economic disruptions.
