00:00Joshua Mahoney is the Chief Market Analyst at Scope Markets. Great to see
00:05you Joshua. So look you know what's going on? Are the markets overreacting or is
00:09there worse to come? Well quite frankly no one knows and you know what's
00:15difficult about this here is that we don't necessarily know the scope of this
00:19we don't necessarily know whether Donald Trump is using this as a ploy to be able
00:23to get country to come to the table and strike a deal. Remember in his first term
00:27in the White House he ultimately got China to commit to spending X amount of
00:32billion on US goods and investing into the US economy. Maybe that's an endgame
00:36and maybe not you know if it feels like this time around he feels he's a lot
00:41more steadfast in his approach and it also feels like he changes on a
00:46day-to-day basis. It started off being that it was reciprocal tariffs then it
00:50was Liberation Day because he probably didn't want to just have reciprocal
00:55tariffs he wanted to add on top of that. Now we're talking about every single
00:58country out there and we don't necessarily know the size of it nor the
01:01longevity of it and so the rebound we've seen today with the Dow actually in
01:06the green now does point towards some people thinking that Wednesday's
01:10going to be a sell the rumor buy the fact event but that's not given. But what
01:15about the big step up in European defense spending that we've been
01:20hearing about that's coming? Why isn't that balancing out the feared fallout
01:25from US policy changes? Well it has to be honest I mean if you look over the
01:32course of the past month I think the DAX is up 10% and the US market says heavily
01:36down and the fact of the matter is that we will get some domestic spending
01:41that's going to have to counterbalance it but the US consumer is absolutely
01:45massive and the rest of the world has sort of hung on the coattails of the US
01:48consumer and that's why they often have these huge trade deficits. If the US
01:53consumers will spend domestically then these other countries the likes of China
01:56the likes of Europe are going to have to find their own source of demand. Yes that
01:59may be government spending and equity markets can ramp up a little bit off the
02:04back of that but still that's only going to help certain parts of the likes of
02:09the DAX or the European markets and other parts are just going to continue
02:13to feel the force. So yeah defense stocks in Europe looking good but other parts
02:17of Europe certainly coming in the firing line and we're getting closer to
02:21the date so people are sort of getting a little bit more jittery once again. You
02:25mentioned the US consumer which is so important this could have knock-on
02:30effects beyond the stock markets into the broader economy. What's it
02:34going to take to get consumers get spending again and to restore wavering
02:40consumer confidence? Yeah and that's the thing isn't it I mean ultimately you
02:46would think that this is a US first approach and the US is going to be fine
02:50and everyone else is going to be awful that's not necessarily the case we're
02:53now fearing for higher inflation but also a potential recession over in the
02:57US we've seen a collapse in terms of consumer confidence in the US collapse
03:02in terms of the outlook for much of the manufacturing sector and a rising of
03:07prices so certainly for the time being it feels like Donald Trump is front
03:12loading all of the bad news which often does happen because you can just
03:16write off any negativity as a result of your predecessor but certainly soon
03:21enough he's going to have to start coming out with some good news and by
03:23and large that's probably going to be additional spending or tax cuts and
03:27things like that but certainly right now we're in the thick of it and it's all
03:30bad news. It's bad news the stock markets don't like it some investors aren't
03:34waiting for that good news they're piling into gold we're getting you know
03:37record highs again and again what's your outlook there? Exactly I mean look
03:42ultimately before any of this started I sort of looked at the past year and a
03:46bit and thought you know this is the perfect environment for gold to
03:49outperform because generally it does very well when central banks are easing
03:53and this one was telegraphed in the past when we see central bank easing it's a
03:57sudden reaction to a market collapse whereas this time around they had to raise
04:02it to bring down inflation but they always wanted to cut interest rates so
04:06it's benefiting from that anyway and now all of a sudden you're seeing the
04:09breakdown in terms of trade relationships and certainly we've seen
04:13the BRICS nations already starting to move away from US Treasuries moving
04:17towards gold and it feels like that isn't just a BRICS phenomenon now
04:20certainly the latest retail sales out of the UK seeing that people in the UK also
04:24stockpiling gold so right now it feels like the safe haven because the dollar's
04:28also getting hit so people are trying to find that one area of safety and
04:33precious metals appears to be it. Right well we all need to hold our breath I
04:36think until Wednesday. Joshua Mahoney at Scope Markets, thank you.
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