Globalization
Pfäffikon SZ, Switzerland – The choice on Donald Trump as president of the U.S. confirms that anti-globalization is gaining popularity in developed economies. It can no longer be ruled out that the free-trade will be further limited in the course of time. The victory of Trump can cause a decline in the liberalization of the world trade and can usher a new era of protectionism. The key question is, therefore, whether Trump will not act against his interests.
Volatility
Populism rampant in recent days. “Long-only” investors benefit from the ––temporarily–– opportunistic image that Trump has created. However, for Trump, it will still be an uphill struggle to get the U.S. economy off the ground. After all, it must come out of the length or the width. Negative aspects are being ignored, but will sooner or later see the light. More volatility on the global markets seems, therefore, to be an obvious result.
Reversal
In recent years, much has been said and written about globalization. A seemingly imminent reversal raises the question of what globalization has brought us? It is notable that, for example, the current (sputtering) bull market in equities is supported by a handful of companies (FANG). This is no coincidence and reflects the impact of globalization on the stock markets, although in the extreme. The bar where the stock market is walking on is thinner than the bar Olympic champion Sanne Wevers was showing her skills.
It is distressing how the middle class is undressed since the nineties. Globalization has led to more inequality. The growth of free trade has not resulted in a positive impact for every citizen in developed economies. In this sense, the election of Trump is no surprise. On the other hand, globalization has led to the production of some extremely high-quality products at a relatively low price.
If it would be wise of Trump to proceed with more protectionism is a question that is difficult to answer. Not entirely coincidentally, particularly the middle class in Europe and the U.S., is hit the hardest by globalization. Extensive specialization should be the key. However, the average European or American has become duller, grayer and shallower by globalization. The future will likely to require even more adaptability from him or her apparently that stretch is currently not available.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in above mentioned shares and has no intention of doing so in the next 72 hours.
