Brave New Negotiation

January 16, 2020

My Dear Reader,

Yesterday, Trump signed a phase 1 of a new deal with China.  Understandably, this is had a boon effect on the economy, with all screens reading green for the past 48 hours. This would be a minor footnote in any other presidents regime but here, I believe we found a new negotiating tactic. after all, the world runs on the US dollar. Simon black, owner of sovereign man investing makes that clear in his article last week.

“When Saudi Arabia’s state-owned oil company sells petroleum to the Chinese, that transaction takes place in US dollars. Last year when Air France (a European airline) agreed to purchase 60 jets from Airbus (a European aircraft manufacturer), that contract was negotiated in US dollars– even though both parties are European!”

The strength of the United States economy it’s something that the rest of the world cannot live without. Therefore, in order to raise our position when negotiating with foreign powers, Trump has shown us that a tariff on goods can be implemented long enough to hurt the opposing Nation and still not interfere and the US GDP. Though I believe this is so long as taxes are low, or are newly lowered.  Donald Trump here has shown us exactly how to negotiate, to know when you have the upper hand and never supplicate. It is an inverse from the Obama years, and that’s not a political opinion but a statement of fact.

But what does that actually mean for the average American? Why should you and I, with our personal financial problems care of that two warring nations are back and a relatively peaceful state? For one, the majority of Americans have their Savings in the stock market, and so the lowering of tariffs Allows for a cheaper exchange of goods, and strengthens the commercial sectors and agricultural sectors of the economy.  seeing as though those are some of the largest sectors in the US economy, it’s only natural that the markets reflect that. However it’s a shame that most Americans are Diversified.

This may seem like a hot take or a shocking statement, but here’s what I mean. Because we not only diversify money into equity and non-equity positions, but also within funds, positions are not solely taken with one company. she might have a mutual fund that is invested heavily in the agricultural sector but it doesn’t mean that it will get the full growth of the soon to boom soybean sales. Course one of the only solutions to this, if you still want to be in the stock market is to take control of your stocks or directly or by having a brokerage account. even then, the diversity curse might still get you.

 on the plus side being Diversified means you won’t take as much of a loss should the bottom fall out of the market, and if not all your money is in stocks anyway, the consequences of a market collapse could be foreign to you.

To your creation and potential,

Kevin Prendiville