For the first time in over 100 years, we will have two candidates who are not in favor of free trade.
Both Hillary and the Donald believe that other countries are taking advantage of the US. They both want to through up high tariffs and duties.
The Donald will renegotiate with everyone and, of course, it will be beautiful and great after he is through negotiating.
Hillary will just hit a giant reset button. Oh wait, that didn’t work in Russia.
This is hurting the stock market right now. The market believes that free trade is good for the global economy. Shutting down global trade means a slower economy if not a recession/depression.
The last time we had a trade war was back in the 1930’s when just about every country went to war in trade. This was a major cause of the Great Depression. Suppressing trade means less sales for companies and therefore less profits and therefore laying people off.
But some people say, like Donald and Hillary, that the US is being taken advantage of. That other countries are using their currencies to take business from us. That they can export to us but we can’t export to them.
That is certainly true.
But we need to weigh that against having a Great Depression. I’ll take the small problems.
I doubt that Congress will back wholesale changes to the trade agreements in place so I don’t expect a lot of change when the new President comes in. But Presidents have a lot of power and can cause a trade war on their own if they want. Just not as extensive.
Look for the markets to keep suffering while the election is going on. This election will not cause a bear market but it will keep a cap on any big bull market.
P.S. Check out my free podcast on iTunes to keep abreast of these issues and their effect on the market. Search for Wealthbuilder.