Long -term investment has become more risky while Trump prices shake the markets

Uncertainty has defined the financial markets this year. This does not disappear because the source of the problem is the Trump administration.

Prices are the main financial problem. President Trump sometimes fell back when the markets plunged. But he and other members of his administration have clearly indicated that higher prices are here, even if they are unpopular and that most economists say they are a mistake. The risk of higher inflation and slower economic growth, as well as tense relationships with China and with many allies of old people, now seem to be a reality.

Mr. Trump says he is in his soul “a price” and wants to change the world. It’s wise to believe it. In fact, I think it’s time to accept that the disturbance is there to stay. This causes investor problems. However, even in times of trouble, there are new investment opportunities.

Obligations are an example. The treasure market has drew considerable attention lately because, in response to pricing announcements, yields have gone bankrupt and prices have flowed in a way that has been associated with full -fledged financial crises in the past. This market has calmed down a bit, but the chances of new eruptions are high. They can even be triggered by other parts of the TRUMP tool kit – for example, the president’s objective to extend the tax reductions that expire this year and adding new ones, enormously expanding federal budget deficit and treasury bills to finance it.

Another objective of the administration policy can be causing problems with obligations: weakening the value of the dollar to make American exports more competitive and more expensive imports. (The prices, of course, do so also.) In a densely written article published in November, when he was still in the private sector, Stephen Miran, now the head of the Council of Economic Advisors, made unorthodox proposals to fulfill this feat while maintaining the role of the dollar as a world center. The realization of this would be difficult in the best conditions. But the addition of this ingredient in the volatile combination of administration objectives has undoubtedly disrupted the bond market.

Global investors already have a second reflection on the wisdom to have American dollars and treasury bills, and the value of the dollar has dropped. Like Nellie Liang, former under-secretary of the Treasury for domestic finance, put it in a room for the Brooking Institution, some investors speculate that the cause of fury in treasury bills comes from “growing doubts about cash titles as the world’s pre-eminent assets, in accordance with the decline in dollars”.