Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The World May Soon Split in Two Trading Blocs—Here’s How to Position Your Portfolio

Politics / Global Economy Aug 18, 2017 - 03:00 AM GMT

By: John_Mauldin

Politics

BY PATRICK WATSON : What do freight trains, oil supertankers, and the Trump administration’s trade plans have in common? Once they get going, they’re pretty much unstoppable.

Trump wants to punish nations he thinks treat US companies unfairly. And China is first on his list.


The North Korea missile situation is complicating matters. Trump openly says his position on trade depends on China’s willingness to help rein in North Korea.

It’s taking longer than he’s planned, but rest assured, serious trade actions are coming—and they will have a major economic and market impact.

Now is the time to fasten your seat belt.

Opposition Buzz Saw

Last month, I explained how trade and national defence are now the same thing. At that point, the Trump administration was threatening to impose steel tariffs and import quotas, using a 1962 law that lets the president do this to protect US national security.

The Commerce Department report that would have justified this action was due at the end of June. They missed that deadline, for unknown reasons.

Did the Trump administration back down because other countries threatened retaliation? Maybe.

At the recent Camp Kotok economics retreat, I spoke with someone involved with US trade policy, especially as it affects China. I asked what happened to this “Section 232” action that had seemed so imminent.

My source said the White House ran into a veritable buzz saw of opposition, mainly steel-using businesses and their supporters in Congress.

The opponents appear to have succeeded, for now, but they haven’t killed the idea.

US law clearly gives the president this authority, and he doesn’t need permission from Congress. He can always change his mind. This is a strategic adjustment, not a policy change.

And that’s not the only loophole the new White House strategy tries to exploit…

Intellectual Infringement

On Monday, President Trump signed an executive memorandum asking US Trade Representative Robert Lighthizer to investigate Chinese IP infringements under Section 301 of the Trade Act of 1974.

This section might allow the president to retaliate against Chinese intellectual property or “IP” infringements.

Presently, China forces foreign businesses to share private business information—like software source code—with Chinese joint venture partners. That confidential information often finds its way into the wrong hands, subsequently appearing in counterfeit products.

This is a serious problem, so it’s good that the president wants to stop it. But how he stops it makes a difference.

Get Ready for Globalization 2.0

Last week, I told my subscribers to get ready for “Globalization 2.0.” The present international flow of goods and services will soon hit a barrier at the US border.

While Trump may be the one who pulls the trigger, this has been building for a long time. Many countries are unhappy with current trade arrangements. They want something else—and I think they’ll get it.

Globalization 2.0 has some important investment implications.

Instead of one big, worldwide “sort of free”-trade zone, we will have two trading blocs. They will be:

  • The United States, and
  • Everyone else.

Trade will be relatively free within the US and outside of it. Getting goods across the US border, though, will be difficult and expensive.

Right now, the most successful US corporations are exporters that earn most of their revenue overseas. The weaker dollar gives them a tailwind.

This will change, for both export- and import-dependent US businesses.

Foreign companies with US customers will face a similar problem. As trade barriers rise, US government policies will increasingly put them at a disadvantage to US-based firms.

How to Position Your Portfolio

So how do you succeed on that new world map? Here are the two kinds of businesses that should thrive:

  • US companies whose customers and supply chains are mostly within the US.
  • Non-US companies whose customers and supply chains are mostly outside the US.

Any business that depends on goods or services crossing the US border will face real trouble in the coming years, so keep holdings of those stocks to a minimum.

The good news: many outstanding businesses are already in position to ride out this storm—and Washington's political gridlock is giving us more time to find them.

Even better news: Companies fitting that profile can outperform even if we avoid a serious trade war. Owning them is an inexpensive hedge.

That will be my research focus in the next few months. I suggest you make it yours too. World trade patterns will look much different two years from now.

Subscribe to Connecting the Dots—and Get a Glimpse of the Future

We live in an era of rapid change… and only those who see and understand the shifting market, economic, and political trends can make wise investment decisions. Macroeconomic forecaster Patrick Watson spots the trends and spells what they mean every week in the free e-letter, Connecting the Dots. Subscribe now for his seasoned insight into the surprising forces driving global markets.

John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules