Trump and fuel prices
During the vote count for the U.S. election, Brent oil price fell down to lower than $45 a barrel on London stock exchange.
Oil and gas prices move in sync. If oil increases in price, then gas prices will go up as well. North-South Gas pipeline project in Swinoujscie (Poland), supported by Trump, is not a pre-election bluff or a fake. It will be constructed, thus pushing the fuel prices down. However, if the global economy continues growing at such great pace, decrease in prices shouldn’t be expected. American and Qatar gas can be supplied to many countries of Central and Eastern Europe soon. This is especially anticipated by traditional consumers of Russian gas: Baltic states, Moldova, Ukraine. They wish to get use of diversification and draw the price down. However, oil and gas reserves in the world are decreasing, new ones are unlikely to be found.
Russian ruble, Norwegian krone, Azerbaijani manat, and other currencies, vulnerable to fuel prices fluctuations, are not very strong due to this market volatility. The national currency in Venezuela especially suffered, there prices surged up and wages fell down. In these countries, as a rule, unemployment rises.
Trump’s pressure on the EU
The USA doesn’t have any national friends. It is not often considerate. Some politicians from the EU countries advocated for partnership with Russia, though in name only. The U.S. president himself wanted to cooperate with Russia, but the White House strongly opposed that. Europe’s wish to buy gas in Russia at a reasonable price can be resisted by the USA. The issues of the EU investment policy are also often discussed not in Brussels, but in Washington. The decisions are made not by Donald Trump, but by his colleagues.
Trump and the American economy collapse
It was discussed quite a lot ahead the American election. Nothing like this ever happened, although Hillary Clinton wasn’t elected as the president. At first, the markets’ response to Trump’s election was rather nervous, but they recovered soon. The U.S. dollar continues to be the most popular currency in the world. It’s going to go on in future.
The USA and China
“China is stealing our jobs”, famous words by the U.S. president. Trump did a favor for his voters and supported domestic business. Chinese power obviously depends on the friendship with the USA and its satellites. Is there going to be a trading war between the USA and China? If there is, then China will suffer more. Yuan will depreciate, Chinese export will be reduced, standard of living in the country will go significantly lower. But the Chinese don’t like go bald-headed, they would “wait by the river long enough until the bodies of their enemies float by”. The Spratly islands in the South China sea is a matter of dispute between Beijing and Washington.
Trump and North Korea
Pyongyang policy scares off all civilized world. North Korean missile launches towards Japan seem to be just a show off. But a dangerous show off. It is hardly possible, that the USA will drop a bomb on North Korea. If something alike happens, it is hard to predict how the world markets will respond. However, it is obvious that neither the USA nor North Korea should benefit from the conflict escalation. Japan will neither get any advantages from this opposition. Anxiety is growing in North Korea and in Japan, and that can have a negative influence on the local currency and economy.
Gold market
During the U.S. presidential election, gold price started falling rapidly when Trump had become known to win. When there financial shocks and chaos, speculators, as a rule, start buying gold actively.
Gold weekly chart. Red arrow points to the period of the U.S. presidential election
Gold can also rise in price when everything is good and people get richer. Then the demand for physical gold rises. Gold price is likely to go up in the near future. It is not so high now and has nowhere to move but upwards.
Gold market can well benefit from Trump’s unpredictability. If Trump happens to start a trading war with India, the largest gold buyer in the world, then the population of the country will get poor and won’t buy gold any more. But this scenario is unlikely to occur. Trump has promised tax reduction and increase in infrastructure funding. That means, inflation will grow. And gold can serve as a safe-heaven. Trump’s plans implementation (even partial) guarantees the increase in prices for securities and precious metals.
Trump and the collapse of Mexican economy
Nothing is going to happen to the American economy, but Mexico is in a far worse situation. Mexican peso had dropped from 18.13 to 21.39 peso for USD just for a week during the U.S. presidential election. The refugees inflow, as Trump had promised, significantly declined and it will decrease every day. Trump’s struggle against illegal immigration is going to continue. That means, unemployment will further increase in Mexico. According to some data, every third is actually unemployed in Mexico. These data are depressing. Mexican peso started devaluing with Trump’s coming into power. However, thing got slightly better then. There is a labour surplus in the Mexican cities of Monterrey, Ciudad Juarez, Mexicali. Previously, workers were welcome to the neighboring country. Now, they are being deported back to the motherland. Crime is increasing in Mexico. Many American investors withdrew their capitals and moved to other countries, including their native one.
Silver market
Silver, like gold, considerably fell in price for the week of the U.S. presidential election, from $17.16 down to $15.85 per troy ounce.
Mexico is very rich in silver. Since Cortez times, this country has been supplying huge volumes of the metal to the world markets. Trump’s active fight against smuggling has its results. Previously, much of silver was smuggled to the USA past customs. Now the situation has changed a little. Struggle against smuggling is one of numerous factors, which push silver price up.
Large amounts of silver are necessary for solar plants. It can hardly be replaced by another metal. Besides, silver is used in jewelry industry, chemical industry, and others.
Stock market
When the results of the U.S. presidential elections were being announced, the stock market responded quite positively. It is going up as well now. Everything would be fine, but there is one flaw: there should be a new crisis. Its start is getting closer by the day. Usually, crises occur once or twice in a decade. When another one will happen? Even the most powerful person in the world doesn’t know for sure. When this happens, almost all stocks will start to fall in price. We witnessed a similar situation in 2007-2009.
The stock market can well be rising for some years. As a rule, the higher get the U.S. stock indexes, the more serious is the following crisis. And the U.S. indexes have reached their all-times highs. What will happen to Trump when there is a crisis? He will be blamed for everything by his opponents, though doing nothing wrong. The president could be even impeached.
Dow Jones Industrial Average weekly chart. Red arrow points to the period of the U.S. presidential election
The USA lays down the rules
The talks about a new global leader are hollow. Neither Japan nor India nor China can become the world-leading nation. Trumps knows about this. He takes responsibility. He can make a lot of populist statements, but the highest levels of government won’t let him take the fateful step.
Nothing will happen to America. The European Union greatly depends on its powerful partner.
Trump’s concerns in Africa and in the Americas
Trump has his concerns everywhere: in Asia, Africa, America, Europe, Australia. Antarctica, due to the absence of industry, is not interesting for the U.S. president, though.
The USA started taking over Africa long ago. Libya, Egypt, Algeria and some other countries in the continent have huge natural resources of fuel. RSA continues to be the richest African country. The currency of this country, rand, greatly depends on the demand and prices for minerals, mined in the south of Africa. The USA buys most of its gold and platinum exactly in South Africa.
What are the relations between Donald Trump and Jacob Zuma, the president of RSA? They are neutral meanwhile. The USA needs commodities and expansion into rich countries. The events in neighboring Zimbabwe, where the president was removed from the office earlier, demonstrate that the USA has concerns all over the world. Can the same happen to Jacob Zuma? As long as his policy supports white minority in the country and the USA, he has nothing to worry about. The South African local currency is depreciating, so the labour force in gold mines of the country is getting cheaper as well. It is to the advantage of the American companies, working in Witwatersrand, the largest gold reef in the world.
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In the American continent, Donald Trump’s interests extend beyond Mexico. Venezuela, Ecuador, Colombia, Argentina are interesting for the USA due to their natural resources of fuel. However, Columbia attracts attention not only due to its oil resources but also because of drug trafficking to the USA. Active fight against this evil, promised by Trump, can be intensified. That would make the American president more popular.
Chile and Peru, two Andean countries, rich in mineral resources. Peru produces a lot of gold and silver. Chile is the world largest copper producer. It is easy to understand, why the USA has established fascist regime in this country in the 1970s. The U.S. industrial expansion will increase the demand for copper. Theretofore, the Chileans welfare will improve and the “friendship” between the USA president and Chile will grow stronger.
The USA has its concerns in Canada as well. The country has a lot in common with its neighbour. But this is a different state, a sharp decrease in labour migration from Canada into the USA can negatively influence the rate of Canadian currency. In fact, the countries are unlikely to make enemies of each other. The Americans say, “The Canadians are the same Americans, but able to ski”. The relations between the countries will grow stronger. It is rather difficult for Canada to escape from the American brotherly embrace.
Conclusion
Some of Trump’s actions and statements are controversial. He can make opposite statements on the same issue. Traders know about this, they are careful not to trade on the news from Donald. Sometimes, the market respond to strongly to some Trump’s speeches. In case of impeachment, though it is hardly possible, the markets would sink into chaos for some time. Trump’s unpredictability and inconsistency affect all the markets: stock, exchange, commodity ones.
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