Trading Desk
Tariffs, quarrels and trembling: Trump turns stock markets into a rollercoaster
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Martin Raab
Investment-Stratege
Punitive tariffs and confusing news are unsettling Wall Street and Europe alike. President Trump urgently needs to take his foot off the gas pedal, otherwise the global economy is in danger of going off the rails. The fun stops for investors.
Have you already packed your parachute? If not, it’s high time, because the stock markets are about to go into free fall. The reason: Donald Trump is once again swinging the tariff club. This time it’s not just China, but also friends and neighbors. And if there’s one thing Trump can do, it’s cause turmoil on the markets – an influencer, so to speak, but for panic on Wall Street.
Wall Street doesn’t find punitive tariffs funny at all. And now it’s on to the next round: higher tariffs on everything made in China, punitive tariffs on Mexican avocados (no joke!) and car parts. Plus an extra dose of pressure on Canada, because … why not? The markets are reacting like a nervous Chihuahua to fireworks: trembling, panting, panic! The Dow Jones is already reeling, the S&P 500 looks like it has had a bad weekend. And the technology stocks in the Nasdaq 100? A rollercoaster ride for more than three weeks.
Today, President Trump held out the prospect of a grace period for certain automotive tariffs. Apparently, angry calls came not only from Warren Buffet, but also from other billionaires and the CEOs of Ford and General Motors. In the short term, things also look bleak for Wall Street in chart terms. The solution can only come from the master himself: Trump must lower the tariffs on Mexican and Canadian imports – otherwise disaster looms for US companies. In the worst-case scenario, American companies will soon be struggling with drastic price increases in purchasing and have two options: Either retail prices rise (bad for consumers and inflation) or corporate profits fall because higher prices are unenforceable (bad for shareholders).
In the last two weeks, index investments in particular have come under heavy price pressure. Although it is intellectually unattractive to park part of the asset allocation in money market investments, it helps to avoid negative performance. However, the re-entry must be well thought out. Alternatively, derivatives on the Bund Future (in the context of the German new debt debate) or bargains on selected market leader shares, some of which are trading at a discount of up to 30% YTD due to panic selling in the last 14 days, are also interesting at present.
And if you’re tired of the White House’s stock market rollercoaster over the next few weeks, just grab some popcorn and watch the drama from the sidelines. The next turnaround is just a commercial break away on CNN or Bloomberg TV.
