America's Tariff War on the World

As world trade erodes on rising tariffs and rising threats, commodity prices take their toll. The jury is out on whether raw materials decline is enough to offset final price increases due to tariffs. The toll on world trade, though, is not in question. Markets may finally succumb to the long term duration of the American tariff war on the world.

Vista Commodity Market Lab 20190802 pdf is available here!

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Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.

Commodities and Tariffs

Commodities and tariffs don't mix. Actually prosperity and tariffs don't mix. These lessons have been known since the time of Adam Smith and Ricardo and they were relearned at enormous pain and suffering through two world wars and the Great Depression.  That they have to be relearned again TODAY is just one sign of how far we have fallen.

Commodity prices have been depressed. At first due to advances in technology and resulting supply surplus and today due to the threats and now reality of punishing tariffs.

2019 has seen continuing declines in agricultural markets:

BCOM = Bloomberg Commodity Excess Return Index; AG, Energy and Pr. Metals = respective Bloomberg sub-indexes.
The above are continuously compounded rates of return.

Source: Bloomberg.com downloaded 5/11/2019.

Who is going to stand up to this? Who is going to stand for the 75 years of peace and prosperity of the "Pax Americana" post-war markets, borders and world trade? One party cannot do it. Both parties, all of America, must together restore values that brought peace and prosperity to the nation and the world.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.