What I Learned This Week

The trade war continues to inflict pain on global markets.

How will the Trump Administration respond to weakening currencies by almost all of America’s major trading partners? Will the Trump trade hawks see the yuan devaluation as provocative and levy the next level of $200 billion of tariffs? Or, if U.S. equities start declining, will President Trump back off because of the November elections? The answer to these questions will determine whether we are seeing an interim bottom or the worst lies ahead. So far, most of the declines have been in the emerging-market equities and commodities. Will the contagion spread to other markets? If one makes a comparison to the Asian crisis of 1996-1998, the answer is yes. We have not shared the widespread optim…

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