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Hedge Clippings | 04 April 2025 It's difficult to add anything new to the commentary about Donald Trump's "Liberation Day" that hasn't already been said or written. Outside his immediate circle of acolytes, seemingly led by Commerce Secretary Howard Lutnick, we have struggled to find any positive commentary from any corner of the world, (including the economic powerhouse of Norfolk Island) or in any language that supports Trump's upending of the world's economy. Except two: Russia and North Korea. Go figure? Ronald Reagan and every other US president since WWII would be turning in their grave. To be fair, although Norfolk Island was singled out in Trump's Rose Garden ramble, by the time the official list was released, someone had realised there's stupid, and then there's plain dumb, and thus Fletcher Christian's descendants were spared - yet again. One assumes that in due course the results of Trump's "genius" (his words, not ours nor it seems anyone else's) will come back to bite him where it hurts most - his ego and the ballot box. Unfortunately his self esteem/adoration is such that he probably won't notice when it does, and in spite of his best efforts, a third term seems out of reach. Not that the US constitution will stop him from trying. So Australia, and the rest of the world, (except as above, Russia and North Korea) are left to try to decide how to respond to the US directly, and, at the same time, try to fathom how every other country's response will change the overall global economic landscape. One factor to consider is that Trump is obsessed with the trade of goods, where the US operates a deficit. In today's technological and service orientated world, the US has a services trade surplus - admittedly not sufficient to even the score, but he's quiet on that front. Trump will try to pick off individual targets. Maybe the world's best reaction is to coordinate their responses? It worked in 1939 (just, after a shaky start) when dealing with another predictably self-obsessed adversary, even if it did take the US a couple of years to join the fray, and only then when they had no other option, or possibly saw the tide turning. In the meantime, everyone else - along with the RBA - is left to ponder their reaction in uncertain times. For the record, if you can remember as far back as last Tuesday, the newly formulated board left rates on hold on April Fool's Day, just before Trump's Liberation Day. However, they did mention "uncertain" no less than five times, as well as devoting more than 50% of their media release to a section on the "Uncertain Outlook", before returning to the more familiar ground of "returning inflation to target" being the priority. Markets, and as a result, many fund performances, were negative in February and March, and April is certainly heading that way. We spoke with Euree Asset Management's Winston Sammut just before going to press, (see video below) and it is fair to say that with all his experience, he views the immediate outcome as "uncertain" (that word again) but not overly positive. News & Insights Manager Insights | Euree Asset Management Making sense of the banking sector | Airlie Funds Management |
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