If you have any self-directed investments in your retirement portfolio, you might be feeling a little like collateral damage in the global trade war these days. With the recent actions of the U.S. and Chinese leaders, the stock markets have been up and down like a kangaroo on the run. That influences the values of ag machinery companies just as much as the farm gate price of commodities. So those big news events are directly affecting even us little people in the ag sector.
But rather than a global diplomatic spat, today’s events feel more like a mob war, with rival bosses vying to take over the south side of Chicago, a la Al Capone.
It’s been argued by more than a few people that the current U.S. president is running his country like a mob boss, putting people into key government positions based on their loyalty to him rather than their competence for the positions.
That mob description isn’t really surprising. It’s been widely reported for years by the media and authors of books about Donald Trump that he had personal relationships with some pretty sketchy personalities connected to the New York underworld. Of course, I can’t vouch for that personally, but it seems to be undisputed. I recall news reports from the ‘80s and ‘90s describing the lavish parties Trump would throw, in which the guest lists apparently read a lot like the defendant names from a court docket. One writer describing how common that was said there was a slogan known around social circles in the city at that time that went like this: “Not indicted, not invited”. Of course, that’s likely to be a bit of an exaggeration.
Whenever the mob gets involved with an enterprise, things eventually go south for the many as wealth gets sucked out.
Granted, the economies of the U.S. and Canada are still going strong, but the trade dispute with China is now having clearly negative effects on global investment and it has sucked wealth out of the markets for us many small investors.
When the U.S. president announced that he had struck a ceasefire deal in the trade war with president Xi last week, markets rebounded positively, but incredibly on the same day, Canada was obligated to arrest the CFO and daughter of the founder of Huawei, the giant Chinese telecom company, at the request of the U.S.
The whole thing sounds like typical mob strategy. If you were trying to take over territory from a rival boss, what would you do to add pressure? Kidnap the rival’s daughter, of course. I’m not suggesting that company and its executives are pure as snow. The likelihood, given the nature of many in today’s cadre of ultra rich, of them being without sin is far from believable. I’m not even suggesting this is a kidnapping. But the response from China is exactly what would happen in a rival gang facing that kidnapping problem, not between countries that recognize the rule of law. And aside from that, in the entire big picture would such provocative acts on either side be the considered course of action by statesmen?
Don’t forget, this U.S. president has ignored evidence that the crown prince of Saudi Arabia arranged the murder of a prominent U.S. resident, and he has run interference for Vladimir Putin, who is almost certainly behind the murders of many expatriate Russians around the world, not to mention prominent journalists as well as rival politicians in that country, the invasion of Ukraine, and on, and on. And the president personally intervened to prevent prosecution of ZTE, another Chinese company also accused of Iran sanction-related violations.
So, why target this Chinese executive? Well, and I’m spitballing here, but the difference may be that this is about money and power and who gets more of it. Does it start to sound like the kind of thing mobs would fight over?
You can almost see it, can’t you, all those mobsters sitting in the boss’s office deciding how to make a retaliatory “hit”? So far, fortunately, they’re not using real Tommy Guns. It makes me think of an episode of the old TV show “The Untouchables”, except there is no longer a global squad of “G Men” working to administer justice and prevent innocent civilians—or, in this case, corporations, businesses, farmers and investors—from being hurt in the crossfire as hit inspires retaliatory hit. Traditionally, that had been the role of the United States, often regarded as the “world’s policeman”, not its instigator.
So our stock portfolios and farm income potential ride the waves of investor optimism and fear.
St. Valentine’s day isn’t far off. As we wait for the Chinese retaliation, I just wonder if we investors are in for another massacre of our own on that day.