October 31, 2024 • 6 mins
Rabobank's Singapore-based Global Strategist looks at how the outcome of the US Presidential election will potentially affect NZ and World Trade, how a Trump win would affect the wars in Ukraine and the Middle East, and whether 2025 will be a better year for the world economy than 2024?
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Episode Transcript
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Speaker 1 (00:00):
I love catching up with this blog on the country.
He's one of my favorite correspondents. Lover's voice don't always
like the message. His name is Michael every Rabobanks, Singapore
based global strategist the world. Michael is waiting with bated
breath for the US election. What are you calling?
Speaker 2 (00:19):
Well, our house view for months now has been that
Trump would win, and that was obviously looking less certain
for a brief moment when Harris was riding high end
of polls. And nobody knows what the outcome will be
next Tuesday. But for the moment, we are sticking with
that message. It's Trump in the Whitehouse.
Speaker 1 (00:37):
Well, a lot of people are saying exactly the same thing.
What does a Trump presidency mean for New Zealand trade,
because we're a trading nation. What does it mean for
world trade? And what does it mean for the world economy?
Speaker 2 (00:51):
Well, it's staggeringly important, but not directly targeted at New
Zealand because if you listen to the people around Trump.
Not really worth listening to Trump that much because he
has fairly simple messages, which are tariffs, tariffs, tariffs. But
if you listen to the people around him, who can
flesh it out a little bit better. They are repeatedly
making the message that the currently constituted global trading system
(01:17):
doesn't work well enough for enough people, is enormously imbalanced
between large exporters and large importers, and of course the
US is a large importer and can and must and
will change. So that's a fairly concrete message. There are
lots of ways in which it could change, but certainly
(01:37):
the preponderance of evidence suggests that if Trump gets in,
it's going to move in that direction and pretty rapidly,
and that would have second and third and fourth order
effects for every country around the world, especially in New Zealand.
Speaker 1 (01:49):
Yeah, and summary, a Trump presidency has bad news for
New Zealand.
Speaker 2 (01:54):
I wouldn't go that far, because it really depends how
you are looking at these things. If I tell you,
and I've told you this many times over the years,
we've spoken, the global trading system is imbalanced, It is unfair.
It does generate great wealth for some and great poverty
for others. It is not in any way a sustainable system,
either economically, politically or geopolitically, so any critics of it
(02:16):
pointing that out would be completely correct. And even the
people who support the system, would say, well, yeah, of
course it creates all these massive problems, but we like
the rest of it. If you're actually going to be
able to resolve those potentially over the medium to longer term,
you actually have a healthier system, which isn't imbalanced, and
which actually creates greater global demand and a greater number
(02:37):
of places for a longer period of time. So it
really depends on how you're looking at these things. If
you're saying we can't ever change anything because you might
have some short term volatility, yeah, you're what you want
to worry if you think is there a potential upside
in that particular outlook. I like to think there is,
but it certainly does mean volatility short term.
Speaker 1 (02:55):
What is the Dale Jones a record highs?
Speaker 2 (02:58):
Right, because the financial markets have nothing at all to
do with the real economy anymore. They're two entirely separate things.
Speaker 1 (03:03):
Yes, but they're at record highs. Surely they're looking forward.
Surely they're saying the economy is going to be better
in twenty twenty five than twenty twenty four.
Speaker 2 (03:12):
Well, again, you're implying that the stock market has anything
to do with the economy, And increasingly that's not really
the case. Most financial instruments operate entirely their own ecosystem
at the moment, particularly because as part of the imbalanced
system I'm describing a lot of the time, all the liquidity,
the money can flow to the assets, but it doesn't
(03:33):
actually flow to the real economy now specifically, Actually, if
the stock market is pricing in a Trump win, and
I'm not sure if it is doing that fully yet,
because you know nothing is given, you would see dramatic
moves in certain shares. Anyone who thinks any particular company
or sector is going to benefit from Trump would do well,
and anything that won't will go down. So you will
see ups and downs. But as I said, be very
(03:55):
careful how you judge any financial market metric at the moment.
These are the real economy because they are quite distinct beasts.
Speaker 1 (04:02):
Let's look at Ukraine and the Middle East, the unrest there,
what's likely to happen, and we're making of the assumption
once again that Trump wants what changes do we see?
Speaker 2 (04:13):
Well, okay, again, assume Trump wins. We have two wars.
We have a war which Ukraine is losing at a
grinding pace Visa v. Russia. With worrying headlines to that
effect just yesterday. And at the same time, we have
a Middle Eastern war where Israel is doing very well,
but its massively outnumbered in terms of the broader region,
(04:34):
and both of those particular fronts are aware that Trump
would like to see a cessation of hostilities and ends
to war as soon as possible. Because of that fact,
everyone on the ground is going to be doing everything
they can to escalate violence in the short term to
try and make sure they're in the best possible position
(04:55):
for negotiations when Trump comes in. You don't want to
be losing bad when he says, right, everyone stopped where
you are. So I expect a lot more violence, a
lot more volatility in the short term, and then I
expect some serious dealmaking to be done. And I don't
think everyone is going to like what those deals necessarily
look like.
Speaker 1 (05:14):
Michael Livery out of Singapore or Rabobank Global strategist, throw
me a bone here, tell me twenty twenty five is
going to be better than twenty twenty four.
Speaker 2 (05:22):
I can't do that, because no one has a crystal ball.
I can certainly see possible futures where twenty twenty five
could be better. In fact, if I believe correctly, zooming
into your part of the world hasn't keyweed. Business confidence
just hit a ten year high, so there are certainly
green shoots out there to be seen in different places.
And as I reiterate, if Trump wins, it's not necessarily
(05:45):
doom and gloom. There can be boom on the back
of it too. There may be inflation alongside that, but
a boom in inflation is better than a bust in inflation.
So it really depends on how you want to look
at it. If you only want to see risks, you
only see risks. If you want of the opportunities, you
see o tunities. I can certainly see a mixed package
of both.
Speaker 1 (06:03):
Michael Everett out of Singapore. Always good to catch up
on the country. Thanks for your time.
Speaker 2 (06:08):
Thank you,
I love catching up with this blog on the country.
He's one of my favorite correspondents. Lover's voice don't always
like the message. His name is Michael every Rabobanks, Singapore
based global strategist the world. Michael is waiting with bated
breath for the US election. What are you calling?
Speaker 2 (00:19):
Well, our house view for months now has been that
Trump would win, and that was obviously looking less certain
for a brief moment when Harris was riding high end
of polls. And nobody knows what the outcome will be
next Tuesday. But for the moment, we are sticking with
that message. It's Trump in the Whitehouse.
Speaker 1 (00:37):
Well, a lot of people are saying exactly the same thing.
What does a Trump presidency mean for New Zealand trade,
because we're a trading nation. What does it mean for
world trade? And what does it mean for the world economy?
Speaker 2 (00:51):
Well, it's staggeringly important, but not directly targeted at New
Zealand because if you listen to the people around Trump.
Not really worth listening to Trump that much because he
has fairly simple messages, which are tariffs, tariffs, tariffs. But
if you listen to the people around him, who can
flesh it out a little bit better. They are repeatedly
making the message that the currently constituted global trading system
(01:17):
doesn't work well enough for enough people, is enormously imbalanced
between large exporters and large importers, and of course the
US is a large importer and can and must and
will change. So that's a fairly concrete message. There are
lots of ways in which it could change, but certainly
(01:37):
the preponderance of evidence suggests that if Trump gets in,
it's going to move in that direction and pretty rapidly,
and that would have second and third and fourth order
effects for every country around the world, especially in New Zealand.
Speaker 1 (01:49):
Yeah, and summary, a Trump presidency has bad news for
New Zealand.
Speaker 2 (01:54):
I wouldn't go that far, because it really depends how
you are looking at these things. If I tell you,
and I've told you this many times over the years,
we've spoken, the global trading system is imbalanced, It is unfair.
It does generate great wealth for some and great poverty
for others. It is not in any way a sustainable system,
either economically, politically or geopolitically, so any critics of it
(02:16):
pointing that out would be completely correct. And even the
people who support the system, would say, well, yeah, of
course it creates all these massive problems, but we like
the rest of it. If you're actually going to be
able to resolve those potentially over the medium to longer term,
you actually have a healthier system, which isn't imbalanced, and
which actually creates greater global demand and a greater number
(02:37):
of places for a longer period of time. So it
really depends on how you're looking at these things. If
you're saying we can't ever change anything because you might
have some short term volatility, yeah, you're what you want
to worry if you think is there a potential upside
in that particular outlook. I like to think there is,
but it certainly does mean volatility short term.
Speaker 1 (02:55):
What is the Dale Jones a record highs?
Speaker 2 (02:58):
Right, because the financial markets have nothing at all to
do with the real economy anymore. They're two entirely separate things.
Speaker 1 (03:03):
Yes, but they're at record highs. Surely they're looking forward.
Surely they're saying the economy is going to be better
in twenty twenty five than twenty twenty four.
Speaker 2 (03:12):
Well, again, you're implying that the stock market has anything
to do with the economy, And increasingly that's not really
the case. Most financial instruments operate entirely their own ecosystem
at the moment, particularly because as part of the imbalanced
system I'm describing a lot of the time, all the liquidity,
the money can flow to the assets, but it doesn't
(03:33):
actually flow to the real economy now specifically, Actually, if
the stock market is pricing in a Trump win, and
I'm not sure if it is doing that fully yet,
because you know nothing is given, you would see dramatic
moves in certain shares. Anyone who thinks any particular company
or sector is going to benefit from Trump would do well,
and anything that won't will go down. So you will
see ups and downs. But as I said, be very
(03:55):
careful how you judge any financial market metric at the moment.
These are the real economy because they are quite distinct beasts.
Speaker 1 (04:02):
Let's look at Ukraine and the Middle East, the unrest there,
what's likely to happen, and we're making of the assumption
once again that Trump wants what changes do we see?
Speaker 2 (04:13):
Well, okay, again, assume Trump wins. We have two wars.
We have a war which Ukraine is losing at a
grinding pace Visa v. Russia. With worrying headlines to that
effect just yesterday. And at the same time, we have
a Middle Eastern war where Israel is doing very well,
but its massively outnumbered in terms of the broader region,
(04:34):
and both of those particular fronts are aware that Trump
would like to see a cessation of hostilities and ends
to war as soon as possible. Because of that fact,
everyone on the ground is going to be doing everything
they can to escalate violence in the short term to
try and make sure they're in the best possible position
(04:55):
for negotiations when Trump comes in. You don't want to
be losing bad when he says, right, everyone stopped where
you are. So I expect a lot more violence, a
lot more volatility in the short term, and then I
expect some serious dealmaking to be done. And I don't
think everyone is going to like what those deals necessarily
look like.
Speaker 1 (05:14):
Michael Livery out of Singapore or Rabobank Global strategist, throw
me a bone here, tell me twenty twenty five is
going to be better than twenty twenty four.
Speaker 2 (05:22):
I can't do that, because no one has a crystal ball.
I can certainly see possible futures where twenty twenty five
could be better. In fact, if I believe correctly, zooming
into your part of the world hasn't keyweed. Business confidence
just hit a ten year high, so there are certainly
green shoots out there to be seen in different places.
And as I reiterate, if Trump wins, it's not necessarily
(05:45):
doom and gloom. There can be boom on the back
of it too. There may be inflation alongside that, but
a boom in inflation is better than a bust in inflation.
So it really depends on how you want to look
at it. If you only want to see risks, you
only see risks. If you want of the opportunities, you
see o tunities. I can certainly see a mixed package
of both.
Speaker 1 (06:03):
Michael Everett out of Singapore. Always good to catch up
on the country. Thanks for your time.
Speaker 2 (06:08):
Thank you,
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