Ford Says Trade War has Already Cost $1 Billon and Could Layoff 24,000 Workers
Gold ended the week higher. Stocks ended the week lower.
Now that the dust has settled, I’d like to ask you to look at the prospects for the stock market in this economic environment.
A trade war is tax on the businesses and the economy. Import prices are higher. Agricultural exports are fetching less. Ford motor Company is announcing layoffs, as many as 24,000 jobs. It has reportedly lost a billion dollars so far in the new trade war.
Higher interest rates are a tax on the businesses and the economy. Businesses that borrow for inventory and other reasons face increased costs.
Increased government spending is a tax on the businesses and the economy. The eye-popping deficit of $1.27 trillion for fiscal year 2018 that I wrote about recently should remind everyone of the common-sense observations of Milton Friedman, who said that the level of taxation is equal to the level of government spending.
It cannot be otherwise. If the US spends more this year than last – and it does no matter what politicians tell you about cutting your taxes – then the economy is being taxed more. To describe it otherwise is a shell game: the real level of taxation is always equal to the level of government spending.
So, with the wake-up call of the past week’s stock market sell-off and bounce in mind, ask yourself how the businesses that make up the stock market will do in an economy burdened by increasing tax loads: the tax of the trade war; the tax of higher interest rates; the tax of government growth.
Let me close with the recommendation I made a week ago, before the stock market shock. It is more important than ever:
“Those of our clients that have enjoyed the stock market run over the last ten years are strongly encouraged to move profits into gold now.”
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.