Authored by Kevin Muir via The Macro Tourist blog,
Well, that didn’t take long. After unleashing a barrage of bombs on Syria, Trump wasted no time in rattling his saber towards the rest of the world.
Following a weekend meeting with Chinese Premier Xi, Trump clearly sent a message (through his twitter account) that the U.S. intends to next deal with North Korea.
China responded by moving 150,000 soldiers to the Korean border. Although it is still not clear whether China is fully on board with Trump’s plan, the North Koreans are not backing down from the fiery rhetoric.
I am aware that I add little value by discussing geo-politics. Apart from noting that North Korea is probably more full of bluster than true willingness to go to war (after all, the U.S. has Chuck), the situation is difficult to analyze.
But I wanted to point out a troubling development. Before you potentially misconstrue my comments, please be assured I have no desire to make judgments on either Trump or his policies. I have absolutely no need to convince you that my opinion about what should be done is correct. I don’t have all the facts, so I have no ability to say what is the proper course of action.
Yet I want to highlight a potentially troublesome scenario. We can probably all agree that Trump is one of the most insecure Presidents ever elected. Even his friends are aware of this flaw. In a recent Politco article, Tim O’Brien, a Trump close acquaintance described him this way:
“So at the very moment he hates the establishment, he also desperately wants to be approved by it.”
So we have an insecure President, whose approval rating is floundering badly, that has just launched a missile attack on Syria, and what was the result?
Trump has finally been accepted as “Presidential.” Here’s a great recap of the reaction to the strikes from Business Insider:
CNN’s Fareed Zakaria said Friday morning that Trump “became President of the United States” when he authorized the missile launch Thursday night.
David Ignatius, a columnist for the Washington Post, said on MSNBC Friday morning that, “In terms of the credibility of American power, I think most traditional Washington commentators would say he’s put more umph, more credibility back into it.”
MSNBC’s Brian Williams said he was “guided by the beauty of our weapons, and they are beautiful pictures of fearsome armaments making what is, for them, a brief flight over to this [Syrian] airfield…”
Is it any wonder that Trump followed his Syria strike up with threats to North Korea?
Now maybe all of these actions are justified. Maybe this will ultimately make the world a safer place. I don’t know, and neither do you.
But as traders, it is our duty to figure out how these developments will affect markets, not pontificate about their morality.
And the simple fact is that geopolitical tensions will most likely escalate under Trump, not the other way round.
Gold has already figured it out.
As investors, we all know that the worse thing that can happen is to win on your first trade. It makes you think you actually know something, when chances are, you were just lucky. Well, Trump’s success in Syria is even worse because it has also given him the one thing he is craving more than anything - respect.
Make sure you position your portfolio appropriately.