Opportunity is knocking. It’s not often (like in almost never) that there are multiple crisis choices to be made. Gosh, it’s not out of the question to pick two or three crises to focus on either. However, those choices will probably be reduced if a political bias is thrown in, and most likely will. Remember, each crisis carries risk/reward for financial markets as well.
So where to begin? Keep in mind that just because a crisis has not been on the “front page” for a bit doesn’t mean it’s been “solved.” Nope, just replaced by a newer and fresher crisis. Remember tariffs? They were all the rage (literally) a short time ago. Yes, they are still “in play.” In fact, President Trump was up in our 51st state (oops, Canada) for a G-7 meeting with tariffs front and center. Will tariffs rocket inflation higher? Create shortages? Crush global economies? Or, reduce trade deficits and make money for the U.S?
When tariffs were first announced, financial markets said “OMG……it’s the end of the world,” which, of course, it wasn’t. If an investor was pro-Trump, they bought “the dip.” If the investor was a Trump “hater,” they sold. As you can see, a political view is now influencing financial markets and their behavior.
Then there was (oops, still is) the Ukraine/Russia tiff. Once again, not on the “front page” as much but still with us. One result of this crisis is the ramping up of defense spending over in Europe (Canada, too). What happens when defense spending goes from 1%-2% to 3%-4.5% within the EU? Budgets are certainly going to be strained. Probably not much political bias in this crisis, since Russia is hated by all.
Keeping in the war theme, how about this Israel/Iran (and company) missile shoot out. It has been building for quite a while but this could be the mother of all crisis’s. At stake is a nuclear confrontation. Yes, Russia/Ukraine too, but looks like the Iranian’s dream of a nuclear bomb is over. Obviously looking at the financial markets that will be good news. But, that good news could turn really sour if the war participants start shooting at oil targets. At least good news AFTER the shooting stops.
Yet another crisis is getting much larger, and coming to a street corner near you. Social unrest….here at home. Anti-ICE, Anti-Trump, Anti-King, Anti-Police and probably Anti-Bear Market and/or Anti-Bull Market, too. Oh, and as of last Saturday, Anti-Parade. There is a lot of news coverage and the protestors (mainly peaceful) haven’t really gotten going yet. Summer is prime riot time in case you were curious. Financial markets have not digested this yet, but calling out the National Guard and/or Marines is probably not bullish. Or, it could be bullish if order is restored.
Once again political bias will take precedent. Anti-Trump haters will be protest supporters, Pro-Trump lovers will be law enforcement fans. Political bias should NOT enter financial market decisions, but it does.
Pick your crisis, pick your political leaning, place your investing bets and be ready. Oh, don’t bother asking ChatGPT I already did. It said, ‘I got nothing.’
