When I read this, Trump suddenly made sense.
How do you make money off Trump?
The first point I would make is that Trump is an intensely polarising figure, and the perfect President of our times.
That might sound like a contradiction but go back to Douglas Adams’ Hitchhikers Guide to the Galaxy:
The President is very much a figurehead… the qualities he is required to display are not those of leadership but those of finely judged outrage. For this reason the President is always a controversial choice, always an infuriating but fascinating character.
His job is not to wield power but to draw attention away from it. On those criteria Zaphod Beeblebrox is one of the most successful Presidents the Galaxy has ever had- he has already spent two of his ten presidential years in prison for fraud.
An infuriating but fascinating character..? A finely tuned sense for outrage..? That’s Trump to a capital T.
Trump is not an aberration. Trump is just the end game in a political/economic/media ecosystem rotting from the inside out. He’s not an outsider ruining the game. He is the master of the game.
And so he is the perfect President for our times. He is the embodiment of our times.
And love him or hate him, I think we can all agree he’s singing from his own Hymn sheet. He’s not your classic establishment conservative, and he’s definitely not a progressive.
He kind of exists in his own political spectrum.
And that has some interesting manifestations.
I mean take China. China has been taking the world and the global trading order for a ride for decades.
How is that Trump is the first person to call them on it?
I also think Trump understands what the President’s job is – it’s simply to get elected and then get re-elected. That’s it.
The system is incredibly short-sighted. That’s just how it is. You get an 8-year horizon at best.
And so I think the Trump suite of policies make sense in the context of this short-termism.
So busting up treaties like NATO, or global trade agreements – these things probably don’t help build trust in America, or help the global economy in the long run. But in the short run, your base loves you, you repatriate a tonne of money back home, and stocks and the economy jump.
In the short run, you win. In the long-run, it’s someone else’s problem.
Or what about increasing inequality by dolling out tax cuts to the mega-corporations, while simultaneously trashing the budget. Short-term, it’s a bonanza. Long term, that stuff can bite hard.
So I think that is how we can think about Trump. He’s a canny president just living in the moment.
And that might be all he cares about.
So how do we play that?
Well, I think it’s a big positive for America and America-exposed countries.
You can already see it in the American stock market, and I’ll think you’ll soon see it in countries like… well, Australia!
We make a lot of our economic ties to China, but America is still the bell-whether to our flock.
Take a look at the correlation between US and Aussie Consumer sentiment:
These two generally move in pretty close lock-step. But right now, American confidence is soaring.
Will Australia follow? My guess is yes – as the US and global economy improves, Australia will receive a boost, and since a lot of indicators are already pretty robust (unemployment etc), it should be good times ahead.
The only fly in that ointment could be a serious crash in China.
And that’s the other part of playing Trump. While it’s good for America and the major economies, it’s giving emerging markets a bit of a hammering.
These nations (like Turkey) found themselves flush with cash as money fled the US post GFC.
But now that America is on the up again, that tide of money is turning, leaving some emerging markets high and dry.
The danger is that this tide, along with Trump’s tariff war, seriously smashes China.
That would probably be a net negative for Australia.
But I’d be placing that as an outside chance for now.
Anyway, the only point I want to make is that even if you hate Trump for his long-run impact on politics and the planet, he’s having a real impact on markets right now.
And that means there’s opportunity there if you know where to look for it.