How Can Investors Navigate Trump's Economic Chaos?

CGTN Europe

CGTN Europe spoke to Justin Urquhart-Stewart, investment manager and business commentator.

Transcript

00:00Well, Justin Urquhart-Stewart, the investment manager and business commentator, is here with us in the studio.

00:05Lovely to have you back on the programme, Justin. Great to see you.

00:08So, Jerome Powell saying it's still not time to cut U.S. interest rates, despite continued calls from President Trump that he should do.

00:15And given those comments from President Trump that Jay Powell has a low IQ and is a stupid person,

00:21well, we can probably say they don't really agree on much, do they?

00:24Yes, it's a hard of a subtle approach to try and manage your relationship with the central bank.

00:28I have to say something about President Trump there.

00:31He's broken the complacency that was around certain things you don't do, such as have a go at your central bank controller,

00:38and also in the other aspects of the economy as well.

00:41But do you ever remember, I think it was that Disney film Fantasia, where you have the sorcerer's apprentice

00:46who goes around causing chaos because he knows some of the tricks but doesn't know the answers or the impact.

00:52And that's exactly what he seems to be behaving as.

00:54He's looking short-term on terms of things and mucking around with tariffs without realising the impact that has further on,

01:00which is actually will hurt global trade.

01:03Now, China and America need each other to be able to operate each other because they're in a symbiotic relationship with one another.

01:09Who's got the biggest purchaser of U.S. debt most of the time?

01:12China.

01:12Who's the largest purchaser of Chinese goods?

01:14America.

01:15So they could argue with each other, but they need each other.

01:18But don't muck around in terms of actually having short-term issues, so short-term tariff raises,

01:24when you don't understand the impact on it.

01:26Because what will happen is there will be retaliation, and more to the point, it affects the confidence that people have,

01:31investors and also businesses.

01:33And if you start feeling a fall off in confidence, that means less investment, less people spending money,

01:38and that's how you get to a recession.

01:40I hate to put you on the spot, but I just want to ask you about something that our correspondent Mitch McCann in New York

01:45was just talking about, the possibility of the Shell and BP merger,

01:51which I know you may not even sort of have thought about coming to talk about.

01:55Thoughts on that?

01:56What do you think?

01:57What do you make of it?

01:57Well, it doesn't matter.

01:58BP's had a terrible time over the past few years, and trying whether it's been as oil crises as it had in the Gulf.

02:03And also, it's been, the U.K. management hasn't actually covered itself in glory.

02:07Meanwhile, Shell, Anglo-Dutch, becoming a bit more Dutch than Anglo,

02:11and so if you actually want two global oil companies coming together to have strength against the likes of Exxon,

02:18then that probably does make sense.

02:19However, will the EU turn around and say, this is too strong, you're in a monopolistic position?

02:25Remember, monopolies have to mean everything, but is it too strong for the market?

02:29But on the other hand, Europe needs to be able to have strong oil companies to go up against the other ones,

02:35particularly the American ones.

02:36Well, we'll keep our eyes on that story.

02:38That's still developing, still reports at the moment.

02:41But I want to go back to this idea of chaos that you talked about that President Trump is causing in his wake.

02:46How do investors and the markets navigate all this?

02:49It's very difficult indeed.

02:51If you're a short-term investor, get yourself a couple of cases of scotch and go and sit in a cave in Wales.

02:55And if you still think we're all going to be here next year, then you try to look through it,

03:00albeit you also try and actually make sure you're in assets which don't reflect some of the danger that's going on.

03:06Typically, of course, you'd normally go to the US bond market.

03:09What you've got at the moment is fear in bond markets, which is why you've seen the reaction of the gold price,

03:13and then people turn around saying, I'm not too sure I trust the governments either.

03:17And so they're trying to find what alternative assets there are.

03:20Gold gives them a greater strength in terms of at least I can hold it, lick it, lick it.

03:24It doesn't give you a dividend or anything like that.

03:26But you probably don't want to be going near things like Bitcoin, which based on what?

03:30And so there's an aversion now towards more risk.

03:34Having said that, once you look at the stock market at the moment, people say, well, there's some relief.

03:38Maybe life may get a little politically a bit more easier because they've had a ceasefire in the Middle East.

03:43But this is pretty tenuous stuff.

03:45So short term, you're seeing still some interest in developing the markets.

03:50Medium term, people looking out saying, where does the growth come from?

03:54Well, more on gold and more from you, Justin, in just a moment.

03:57But for now, the business commentator, Justin Erkenshier.

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