Tarrified: A bear market guide

Remember that an investor works with probabilities, rather than certainties. By Kean Tan

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The market moves that followed Donald Trump's “Liberation Day” tariff announcements were quick and sharp, leaving many investors reeling in its aftermath. This illustrates how difficult — even impossible — it is to anticipate the direction of travel on any given day.

In a politically charged environ-ment, it is important to remember that an investor works with probabilities, rather than certainties.

We are of the opinion that no one wins if the announced tariffs are main-tained, and certainly not the US. Other countries, such as Japan, have indicated a willingness to negotiate to bring down their respective tariff rate. However, even if many countries manage to get down to the 10% minimum rate, this will still hurt global growth prospects, while it is unlikely to support the US's ultimate goal.

In our opinion, tariffs are just the first phase of a much grander plan to strengthen US national security. In order to remain the leading world power, the US wants to get its house in order and reduce its addiction to fiscal deficits. The ultimate objective is to spend less on servicing the fed-eral debt and to spend more efficiently on defence.