Blasting like dynamite through the partisan smoke on the economy, Munich-based Allianz SE chief economist Mohammed El-Erian dispelled all the criticism about Trump’s trade war with China. El-Erian believes President Donald Trump has the leverage to squeeze China, and other countries, to reduce massive trade imbalances, favoring everyone but the U.S. With the all major U.S. stock indexes reaching record highs and U.S. Gross Domestic Product hitting four percent, El-Erian sees more U.S. stock market and economic growth over the next two years. El-Erian doesn’t see stock markets or economies in Europe and Japan following the U.S., struggling with high taxes and excessive regulation. When Trump and the GOP passed tax and regulatory reform Dec. 19, 2017, the Dow Jones Industrial Average rocketed up from 24,754 to its close today of 26,720, roughly 2,000 points or eight percent.
Democrats and their media friends highlight only Trump’s economic failures, though they have zero metrics to prove their point. With all U.S. market indexes at record high, Trump’s attempts to renegotiate bad trade deals with China, Mexico, Canada and Europe have paid big dividends for U.S. jobs and consumers. No matter how you cut it, Trump’s economy has outperformed even the most cynical critics, leaving the U.S. economy continuing to add jobs and reduce the unemployment rate to record lows. “All this rhetoric you hear from both sides . . . it’s about the journey, not destination. The destination, in my opinion, will not be global trade war,” El-Erian said on CNBC’s “Closing Bell.” Unlike partisan U.S. economists looking to the Midterm elections, El-Erian is only hamstrung by real economic metrics, all pointing in a positive direction for the foreseeable future.
When economic bears, like NYU’s Stern School economist Nouriel Roubini, forecasts downturns, they rarely give timetables, setting negative expectations for market sell-offs. All bull markets rise-and-fall during periodic profit-taking, sometimes correcting up to 20%. But if recent history is any guide, the last profit-taking sessions have been more modest around 10%, enough to spook some investors but to reassure others that sell-offs are normal parts of bull markets. Bear markets come about because of economic recessions, forecasting slower growth, layoffs and higher unemployment, something not seen since Trump took office Jan. 20, 2018. El-Erian’s analysis runs counter to the highly partisan atmosphere where Trump receives no credit for what objectively are remarkable achievements. Whether it’s about the economy or foreign policy, Trump gets no credit from the biased press.
El-Erian sets Trump’s record straight when it comes to U.S. markets and the economy. “It will get worse before its gets better. It’s part of the process,” said El-Erian talking about how Trump’s trade wars actually benefit the U.S. Closing up 76 points to another record high today of 26,743, El-Erian only sees positive things coming from U.S. stock markets, driving the economy upward. Record profits at Apple Inc., closing today at 217 a share, helped keep the Nasdaq in record territory at 7.986, despite dropping 44 points or 0.51%. Trump’s chief economic adviser Larry Kudlow announced Monday a 10% tariff on about $200 billion in Chinese goods, with tariffs due to rise to 25% on Jan 1, 2019. Beijing slapped the U.S. with tit-for-tat tariffs of 5% to 10% of Chinese goods, knowing it hurts Chinese companies far more than the U.S. El-Erian sees China blinking on the trade war.
El-Erian believes the “U.S. will win the trade war,” something Trump’s been saying since Day 1. Clearly, Chinese manufacturers need the U.S. to consumer the massive amounts of goods coming from its powerful manufacturing base. If China slaps the U.S. with more tariffs, it going to price themselves out of the market, with the U.S. looking elsewhere, including Indonesia, Malaysia, Vietnam and India to replace Chinese manufacturing. It’s time for the U.S. media to recognize Trump as a skillful manager of the U.S. economy, regardless of today’s partisan wars. When you see South Korean President Moon Jae-in and North Korean President Kim Jong-un talking a peace treaty and denuclearization, Trump deserves some credit for opening up doors with his June 12 summit in Singapore, Malaysia. Talking about a peace treaty and disarmament today was unheard before Trump took office.
Cutting through all the media smoke, it takes nonpartisan economists like El-Erian to set the record straight on what’s really happening. If you listen to Democrats or their media friends you’d think we’re heading into recession or closer to WW III. “As long as the U.S. is willing to incur damage, which it is, then ultimately it makes sense for other to provide concessions,” El-Erian said, believing that Trump’s winning the so-called trade war. “We’ve seen this with Mexico. We’ve seen this with Korea. Were going to see it with Canada and China, we’ll see it down the road. El-Erian has no ax to grind singing Trump’s praises on the economy, only hard economic facts. “So the U.S. has a policy driven tailwind of growth. Japan and Europe, it’s the other way around,” said El-Erian, saying Trump’s gone in the right direction. Listening to the facts is hard for partisan hacks
