Money is a coward. It hates unpredictability and when it sees one it runs. This has happened to equities, the dollar, and oil as the laws of economics clash with ideology and capriciousness. In the latest twist of the tariff saga US stock indices dropped sharply yesterday with the Nasdaq Composite index down more than 10% in less than 3 weeks.
The recent sting of tariffs has received some reprieve by the US delaying implementation on the auto industries of Canada and Mexico by 30 days. It is a cynical move and only undertaken as the largest casualty might just be the US car giants that ship materials and parts several times across each border before a unit is finished.
If last night’s speeches by the potentates of the two biggest economies are used as reference points, then the world appears to be one big happy place. Despite the increasing hostilities between China and the US, Chinese Premier Li Qiang, whilst warning of challenges lying ahead, assured the audience that his country will grow at the rate of 5% with a budget deficit planned to be around 4%.
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