In the three trading days leading up to Trump’s much-anticipated “Liberation Day” speech, the market rose steadily as investors apparently convinced themselves that Trump would not do anything improper. That was not to be. Through a dubious invocation of emergency economic powers, unprecedented in modern times – Trump imposed “reciprocal” tariffs that could potentially lead to a Trade War. The stock markets crashed.
In reality, Trump did exactly what he’d promised to do and what he’s wanted to do for decades. The Trump formula was amateur and deceptive, but it was also a perfect expression of his view that trade deficits are evidence that America is being ripped off.
You might wonder what is the role of highly educated and experienced bureaucrats who support Political leaders? Any rational Government or organization that does not support meaningful debate and dialogue becomes a prime target for the mercurial behaviour of its leaders – America is no exception and most of the world appears to be controlled by such opinionated leaders who will not tolerate dissent.
Suresh Subrahmanyan tries to make sense of Trump’s earth-shattering announcement and his encounter with his wealth manager – it’s well worth a good read if you have a portfolio of stock as part of your wealth management efforts! – CLN News Desk
This tariff business has got the whole world in a twist. The President of the United States of America, Donald Trump vowed to impose reciprocal tariffs on countries which enjoy an advantageous tariff equation against the United States. That appears to include every single country on God’s green land including little-known islands where only penguins and seals exist! An auspicious date in April was earmarked for the new tariff regime to kick in. Not for nothing did the poet laureate T.S. Eliot declare that ‘April is the cruellest month’ in his seminal poem, The Waste Land. All this to get things back on an even keel, as far as America was concerned. At least, as far as Trump was concerned. That accounts for pretty much most of the world that export goods and services to the United States and import from that country as well.
Trump has been as good as his word (or as bad, as some may aver). Financial and economic pundits from all over the world have been expressing their unflattering opinions in print, television and social media. Here in India, boffins from the Finance and Commerce Ministries must be working overtime to understand the full implications of Trump’s major salvo and to figure out how best to minimise the deleterious effects it may be having on our economy and on Dalal Street. Despite these preoccupations, the Waqf bill squeaked through in both Houses, but that’s a story for another day.
Speaking for myself, much of what is being discussed on the imposition of tariffs tends to go over my head. Suffice it to say that I am one of those whose primary and admittedly selfish interest is to keep my eyes peeled on how the stock markets are behaving and what likely impact the President’s unilateral actions may or may not have on my own portfolio. As I put this blog to bed markets worldwide are behaving very badly indeed, Trump’s home country leading the way in pursuing the bears. Not a bull to be seen anywhere on the horizon. Having plonked my relatively meagre nest egg on bank fixed deposits and cautiously on market related mutual funds, as most middle-class retirees tend to do, I needed to understand a bit more about the subject, if I did not go bankrupt before then. Accordingly, I placed a call to my portfolio manager and invited him home for a bit of a chat.
There is this strange thing about portfolio managers. They are always smiling, ear to ear. Now and then the markets do perk up and they will have every reason to display that sunny disposition. That one can understand. However, when the Sensex and the Nifty are tanking like all hell has broken loose, it beats me how our fund guardians can look like they have just won the lottery. It is one of life’s eternal mysteries. Anyhow, I welcomed my consultant and as he settled himself comfortably armed with the ubiquitous laptop, I observed that his demeanour suggested that the Sensex was on a bull run and not, as was the case, being hounded down by rapacious bears. I was somewhat frigid but he did not seem to notice.
‘Good morning, Sir and how are we today?’ he began cheerfully, sounding just like my GP.
‘You tell me, my friend. Markets are going south so fast the authorities might have to apply the circuit breaker.’ As you can see, I could come out with the jargon just to impress these johnny-come-lately experts.
‘Now, now Sir, there is no cause for alarm. Your portfolio consists mainly of blue chip, large and mid-cap stocks and they have been only marginally affected. Anyhow, at present levels, the markets are most attractive for fresh investments and that is why I have come with some amazingly outstanding proposals for you to consider. If you have some spare cash lying around.’
I really had to hand it to him. Here I am fearing doom and disaster, and this young investment bozo was displaying a level of sangfroid I could not have believed possible. Before I could challenge him on what I felt was his misplaced optimism, particularly with regard to ‘spare cash lying around,’ the young gun continued.
‘You have to take the long-term view, Sir. Rome was not built in a day, if you will pardon my slipping in that quote. I say that to all my clients. I have it on excellent authority that India is on a featherbed of a wicket as far as our relations with the U.S is concerned. Tulsi Gabbard is almost a Hindu, Kash Patel is a Gujju, Vivek Ramaswamy is a Tam Bram and Trump loves all of them to distraction. Ergo he loves India and he loves Modi. The 27% tariff levy on India has already been reduced to 26%. More lollies are on the way.’
I had to throw some cold water on the young man’s ardour. ‘Listen my fine, feathered friend, before you start singing Tu cheez badi hai, Musk, Musk, let me put you straight on one or two vital issues. This tired, old cliché of taking the long-term view is all very well if you are talking to a 30 or 40-year-old. I am in my 70s and my long-term vision can only be viewed from my rear-view mirror. It is decidedly in the past. I am willing to listen to plans that can impinge on my savings over the next three to five years, tops. Capiche, my dear kemo sabe?’
He was slightly befuddled. ‘Sorry Sir, I didn’t quite catch that.’
‘Of course, you didn’t. Never heard of Lone Ranger and Tonto? Since you pulled all that Rome wasn’t built in a day stuff, I was just getting a bit of my own back. Let’s get back to business, shall we? Tell me exactly why I, a mere retired senior citizen from a populous country should not panic over all this tariff tamasha when even the natives in Cocos (Keeling) Island, Christmas Island, Heard Island, McDonald Island and Norfolk Island are having kittens over Trump’s tariff tantrums? Have you even heard of these places? In other words, no place on earth is safe. Feed all that into your laptop and see what gives.’
My hedge fund friend appeared to be hedging his bets. He seemed shaken but not entirely stirred. These chaps are made of stern stuff. ‘I get your point Sir and you have every right to feel jittery, but I am here to apply the soothing balm. In precisely one week’s time the markets will recover all its losses and you will be smiling again. You have been wisely invested for many years and have seen many up and downs. Swings and roundabouts. You have booked profits on several occasions, bear that in mind. Don’t take on so. The experts say that India has played Trump’s tariff game very smartly.’
I snorted somewhat cynically but he was cool as the proverbial cucumber. ‘By the way Sir, what or where is McDonald Island? Have these burger kings, not to be confused with Burger King, taken over an entire island? The islanders and the penguins must be feasting on Big Macs big time.’
I was not impressed. ‘Are you trying to be funny? The fast-food chain you are referring to is MacDonald’s. The island is McDonald. Slight difference in spelling. Anyhow, I can’t say I am entirely convinced by your explanations and you have not said anything I don’t already know about this tariff imbroglio, which is not very much to start with. We will conclude our meeting here. Have a cup of tea and some dry rusks, which is about all I can afford at this time by way of hospitality.’
We partook of the meagre refreshment on offer and he left smiling broadly and thanking me profusely for the time, tea and rusks. It was as much as I could manage not to slam the door behind him.
My ears might have been playing tricks with me but I distinctly thought I heard the young man breaking into a few snatches from that old 60s Tom Jones hit on his way out, Smile away your blues / And let the sun come shining through / Laugh and you will see / You could be happy with me / All you gotta do is smile / And the world smiles too.
My heart went out to him.
Published with permission from Mr. Suresh Subrahmanyan. He blogs at –https://sureshsubrahmanyan.blog/
Indian stock market indices, BSE Sensex and Nifty50, crashed on Friday amid global market turmoil triggered by growing recession concerns and new tariff declarations from US President Donald Trump.
However, pause and take a look at the way the market has performed – 300% increase in 5 years. Even now, the market has dropped to the previous year level.
The principles of sound investments hinges on Growth, consistently improving profitability, Good governance, strong leadership – especially the CEO and CFO, potential for the business segment/market.
This who indulge in day trading and speculative buying ultimately pay the price for their misdemeanours.
Considered opinion is stay the course – especially if one cannot influence it.
We are seeing a sharp sell-off in the markets, and the 19,000–21,000 range is shaping up to be a good entry point. This could be an opportune time to start investing in quality stocks with a long-term perspective.
My friends, who go back to being my classmates from the 1970s and colleagues who took their Green Cards and became proud Americans have been calling to check what the impact has been like for India. My response was tell me about yourselves – I didn’t make the change from being the Indian that I am through an accident of birth!
The stock market has shaved off 15-25% of their wealth in 3 days. They are nervous what with healthcare crumbling, no quality jobs for their children and things look grim.
The fact is that in the long run, the stock market provides the best return on investment and with tact it is the best asset to hold in a balanced portfolio. The NSE has opened at 22905 today and soothsayers predict it could drop to 19000. Wealth advisers are awful in a bear run – quite literally one has to grin and bear it.
This will change if are strong enough in will to hold on and not panic. In the next 18-24 months things will turn around, albeit with a NEW WORLD ORDER being churned out by the prevailing chaos. The dollar will loose its predominance as a currency and hopefully mankind would have learnt from the chaos of the 1930s, 2008 and other major shakeups of the world market. Until then, try and maintain calm and sit tight.