In my last piece, I'd had the downtrend coming too early as only a technical formation to follow through. Now the news would not allow any sunshine close to the S&P's Best so soon, as the Trump Administration will introduce tariffs to Canada and Mexico imports. The short term trends on the index are already in the red.
More Tariffs
The Administration also plans tariffs on the Agrarian sector, which comes as horrific news to the farmers who import many material to produce their goods. The Administration calls for farmers to simply "overproduce" and start producing their goods in America, but there are three problems with that:
1st, the costs for staff. Not many people are left who could work on American farms after Trump's Administration has them deported by the grand. Hiring people to do hard labor almost nobody wants to do these days anymore is close to impossible at the current level of wages. The farmers have to prop up the payments if they want to have a chance to produce the required surplus at all.
2nd, the surplus. The produced surplus of goods does not allow to compensate costs with higher prices, as food will begin to flood the market and decrease food prices. That's good for food-insecure households, but will end in a disaster for the farmers, many of which will be forced to give up. Large agricultural corporations are likely to take over land from farmers, and they'll jack up prices back again as soon as they can.
3rd, the market. Whether the domestic market can consume farm's produce in a whole, no matter how big the surplus, is unclear for now as many households are currently above their price points on groceries. However when the surplus comes to market and produce becomes cheaper, there is not much wiggle room the surplus can fill before leading to a massive fall of prices and, thereafter, the sector of independent farmers. Also for big corporations the surplus can become a problem, because many countries will retaliate Trump's tariffs with their own tariffs to hit U.S. exports with a huge blow on their appeal.
Multilateral Tariffs Union against the USA
In multiple countries, once huge and high-ranking trade partners with the U.S., a Tariffs Union with members in Europe and Asia are discussed between politicians. As many countries face U.S. tariffs, the idea to create a new market of Free Trade aside America is floating around. European lawmakers discuss the idea of creating a Tariff Union with a few of the BRICS states, such as Brazil, South Africa and China, and propose that the EU lifts tariffs wherever the U.S. has laid them, so goods with a tariff for the U.S. can be sold elsewhere tariff-free.
U.S. will drown in surplus production with nowhere to go
Such plans would make it significantly harder for the U.S. to import goods their economy requires, and as the Tariffs Union would react on U.S. tariffs with their own, the U.S. will find it even harder to export its surplus. For now, such concrete plans depend on new players stepping up to the stage, such as Germany's Chancellery Candidate Friedrich Merz. The Germans, always reluctant to lay new tariffs onto the Chinese, could become a strong voice to form such trading alliances, even if they come with a price: China's forthcoming on such plans might depend on the EU's position on Taiwan, which the Union might reconsider and eventually overthrow, basically having no real interests to protect in the region. (Except for the electronics and chips industry, which is lured to the U.S. by Trump and creating a surplus of goods there.)
The U.S. market and economy are facing sinister times domestic and foreign, as Trump's politics are currently only profiting one faction of participants:
the short sellers.
More Tariffs
The Administration also plans tariffs on the Agrarian sector, which comes as horrific news to the farmers who import many material to produce their goods. The Administration calls for farmers to simply "overproduce" and start producing their goods in America, but there are three problems with that:
1st, the costs for staff. Not many people are left who could work on American farms after Trump's Administration has them deported by the grand. Hiring people to do hard labor almost nobody wants to do these days anymore is close to impossible at the current level of wages. The farmers have to prop up the payments if they want to have a chance to produce the required surplus at all.
2nd, the surplus. The produced surplus of goods does not allow to compensate costs with higher prices, as food will begin to flood the market and decrease food prices. That's good for food-insecure households, but will end in a disaster for the farmers, many of which will be forced to give up. Large agricultural corporations are likely to take over land from farmers, and they'll jack up prices back again as soon as they can.
3rd, the market. Whether the domestic market can consume farm's produce in a whole, no matter how big the surplus, is unclear for now as many households are currently above their price points on groceries. However when the surplus comes to market and produce becomes cheaper, there is not much wiggle room the surplus can fill before leading to a massive fall of prices and, thereafter, the sector of independent farmers. Also for big corporations the surplus can become a problem, because many countries will retaliate Trump's tariffs with their own tariffs to hit U.S. exports with a huge blow on their appeal.
Multilateral Tariffs Union against the USA
In multiple countries, once huge and high-ranking trade partners with the U.S., a Tariffs Union with members in Europe and Asia are discussed between politicians. As many countries face U.S. tariffs, the idea to create a new market of Free Trade aside America is floating around. European lawmakers discuss the idea of creating a Tariff Union with a few of the BRICS states, such as Brazil, South Africa and China, and propose that the EU lifts tariffs wherever the U.S. has laid them, so goods with a tariff for the U.S. can be sold elsewhere tariff-free.
U.S. will drown in surplus production with nowhere to go
Such plans would make it significantly harder for the U.S. to import goods their economy requires, and as the Tariffs Union would react on U.S. tariffs with their own, the U.S. will find it even harder to export its surplus. For now, such concrete plans depend on new players stepping up to the stage, such as Germany's Chancellery Candidate Friedrich Merz. The Germans, always reluctant to lay new tariffs onto the Chinese, could become a strong voice to form such trading alliances, even if they come with a price: China's forthcoming on such plans might depend on the EU's position on Taiwan, which the Union might reconsider and eventually overthrow, basically having no real interests to protect in the region. (Except for the electronics and chips industry, which is lured to the U.S. by Trump and creating a surplus of goods there.)
The U.S. market and economy are facing sinister times domestic and foreign, as Trump's politics are currently only profiting one faction of participants:
the short sellers.
Trade active
Ever since the upper level broke, I'm in and interchanging product with product. My approach requires at least three or four checks on the trade per day. I retreat every day where I expect a counter-movement against the trend. As laid out in the chart, I expect a bigger "dead cat bounce" within the next two weeks, before the index continues the course of recession.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.