Investor “The Big Short”: Trump rises new prices, the economy knows the “stagflation period”

Danny Moses, the founder of Moses Ventures who was made famous by the return book The great short circuit, warned that despite certain solid economic indicators in the face of pricing uncertainty, signs of stagflation are already on our doors.

“There are so many mobile pieces at the moment that it is really difficult to decipher where you are going to identify,” said Moses Fortune. “Everyone can find a point of data that says it is inflationary, and someone can find a data point that says that it is not the case. It is therefore difficult. But the net result … has the economy went through a stagflationist period? It seems to me, it is.”

President Donald Trump announced on Friday a new series of radical rates, including a 39% tax on Swiss exports and a 35% tax on certain Canadian exports to the United States, the administration extends the deadline of dozens of sales to other countries, including Mexico, the largest American trading partner, which obtains an additional 90 days. The logic behind the prices differs slightly from the previous tricks, where Trump pleaded for samples as a means of eliminating trade deficits. The United States, for example, have a trade surplus with Brazil for about a decade. Instead, Trump imposed steep prices in Brazil for political reasons, such as the pursuit of the ally and former Brazilian president Jair Bolsonaro, who was accused of having plotted a coup following his loss of presidential election.

The markets fell after the announcement – as well as a lower than expected job report – following a rally of a week of solid income and fears of trade war. But Moses said that the last tariff cycle had once again aroused anxiety in the face of the future of the economy, which makes investors “a little more concerned with the unpredictability of what comes out”.

“No one knows how it will happen, because this type of thoughtless price is unprecedented,” said Moses.

Where is stagflation?

Stagflation fears, or the stagnation of economic growth coinciding with inflation, softened, in particular after Wednesday GDP data showing a rebound in American economic growth in the second quarter of the year. This follows a negative estimate of the first quarter GDP which was largely the result of the commercial chaos calendar forcing companies to store goods before laying down consumers buying this inventory. In the end, the growth of the second quarter defeated the contraction of the first quarter, although economic growth has slowed down in the first half.

The White House spokesman Kush Desai said Fortune In a statement that growth recovery and “cooling inflation … suggest that stagflation is simply the last fashion for Panican (sic) paranoia.

Moses said the economy had not yet seen the full impact of prices. The president of the Fed, Jerome Powell, held stable interest rates this week and said that more information is needed to make a rate drop.

“Higher prices have started to manifest more clearly at the prices of certain goods, but their global effects on economic activity and inflation remain to be seen,” Powell told journalists after the Fed meeting on Wednesday. “A reasonable basic case is that the effects on inflation could be short -lived – reflecting a punctual change in the price level. But it is also possible that the inflationary effects can rather be more persistent, and it is a risk to be evaluated and managed. ”

Not only will inflation probably increase as it has already started to do, although modestly, said Moses, but companies will continue to face the impact of prices. Apple was the last giant to feel the prices burn, reporting solid income on Friday, but a stroke of $ 1.1 billion in the samples. While companies continue to rely with the impact of prices, they will probably choose both to eat margins and compromise growth, as well as increase prices on goods, according to Moses, stagflation being the most likely result.

“Choose your poison,” said Moses. “This will either reach corporate margins, and income will drop, which means that the market is expensive, or it will be transmitted to consumers and will be an inflationary. I think it will be a combination of the two.”