Monday, January 30, 2017

US travel ban issued by Trump will affect US Dollars and US Stocks negatively in the long term

As we go into 2017 the consensus is interest rates will go up, you want to be long US stocks and overweight US Dollars. But I think, but its also about the travel ban and protectionism.... But protectionism, I guarantee you, is not going to be good for the U.S. That for sure not.

The US has a trade and current account deficit today. That is not an issue today. The world has a huge supply of US Dollar floating around. Sometimes the global liquidity gets tighter but in general the US Dollar position and assets in the US depend on one factor - confidence of foreigners investing in USA. What if I'm a foreigner and I see a travel ban. So the private citizens, they see a travel ban on Muslims. Anyone with any brains will think what if tomorrow there is a travel ban on the Chinese and I own a property in the US or I own assets in the US and I can't access assets in the US. So I think this travel ban, psychologically, will have a very negative impact in the long run on the U.S. dollar and U.S. assets.

Number two, protectionism, I just came back from Mexico, the price level is now unbelievably low. So a lot of countries  Turkey, Mexico but even in Asia because of the depreciation of the currency against the US Dollar, they have become quite reasonable in price.