11.07 - new policies of USA are blowing the market numbers
Markets are once again suffering from Trump's policies.
We have put trade was fears aside last week after the tariffs were imposed and there was no impactful answer from Chinese side of the deal. But today we have to re-open the topic and see what is going on in the markets as Trump at it again. Last night Trump administration slapped another package of upcoming tariffs in the face of Chinese government. And today we instantly see the reaction of the markets.
Will Trump ever stop is the question that we are asking ourselves today? His every move is in the spotlight and every next decision that he takes is more controversial and damaging than the previous one. We thought that we saw the last of the tariffs after the previous package was announced and later sent into motion. But right now, the ordeal is on again.
Markets do not like the perspective of the new tariffs. And neither do we. It seems that Trump is waiting to see what number of tariffs is going to break the back of Chinese economy. We are under full impression that Trump not only wants to bring all of the American manufacturing to America but also to eliminate all of the competition on the way to results. If that so is Trump aiming for American monopoly on every market? Well, it sure seems so.
But is that really is the case, we can't see how that is good for the goods, offered to the world by Americans. We all know the unspoken law of monopoly – the less competition is there, the worse is the quality of the product. Although we still have hope that Americans are so used to perfection that they will not allow themselves to spoil their goods just because the rest of the world will have no choice, but to buy them.
Although in this situation we have to look at the greenback. Today it is up. Maybe feeling the weak yuan helped American currency grow after days and days of losses? We think so. We saw this already – with previous package of tariffs. If the situation goes by the same script, we will be able to see dollar grow for several days or even weeks in a row. All because of the weakening of Chinese economy in the East. Although given that there is a NATO summit and meeting with Russian president awaiting Trump, the situation may be reversed.
Lately Tesla has been having a lot of activity. And shares of the company have been feeling it. After Musk decided to eliminate some of the very important car tests on the manufacturing site shares fell but right now with the news on the new possible partnership emerging shares are going up. And who knows, if everything goes well, we may see the new heights for TSLA.
China desperately needs electro mobiles. With the level of pollution in the country going off the charts it is no wonder that the Chinese will try and restrict the number of cars in the country. And it seems that it is exactly why Tesla got in right before the restrictions. Although it seems that Chinese strive for Tesla monopoly at their market as they have restricted the number of foreign ownership caps for the companies that produce fully-electric cars.
Why Tesla? They are the most popular name at the given segment of the market right now. Although the company hasn’t seen as much success as we would hope it to. But we can see now that the company is trying to open up new markets and win new investors over. Chinese market would offer a lot of new opportunities and buyers to the company. In return Tesla is going to pay taxes and provide workplaces to the people in the country. Not a bad deal, right? But what's in it for us?
A growing company looks for more investors and in order to attract them will offer a lot of interesting things in return. For example, good return interests, perks in purchasing the products of the company and so on. And the more investors put their trust in the company, the better the shares are growing. The better it is to long them. It is possible, that soon the shares will breach $380 per share point, although not it stands at $322.47 per share. The highest point in a year was $379.81 per share. They peaked in the middle of September 2017. So, we are sure that we are to expect the growth and the opportunity to long the shares.
In today's world politics and economy are something inseparable. Every move on the world political arena is watched by the markets and is instantly reacted to by the world assets. So, we will be watching closely for the rest of the week. And there is a lot to watch.
Today Trump went to Europe in order to attend NATO summit that is going to take place on July 11-12. And the other countries of NATO are not expecting Trump to come bearing gifts or at least good news. Trump has been confronting NATO countries saying that they haven't been spending enough money on their defense and thus the entire financing some from the US. There are even fears that US will try and withdraw from NATO but that is not going to happen.
Right now, the biggest threat that NATO is facing is Russia's aggression in Ukraine and Syria. That is why the alliance has to stick together. After all Russia has nuclear weapons. And Trump going to meet Putin next Monday is not really giving a lot of hope to the politicians, traders, investors and just people of the world. Right now, before all the meetings and statements we see dollar going up and euro shrinking but the tables may turn as we expect Euro-politicians to stand up to Trump.
So, to sum up our thoughts and expectations. We are hoping that everything goes smoothly at the upcoming summits. But in case Trump is unpredictable in his ways we advise to be very cautious with dollar and euro including trades.
- by Anna K.