What's the Deal with Trump's Tariffs and Its Impact on Investors? Let's Break It Down
Potential implications of U.S. military engagement for financial investors
Steer clear of stocks, warns capital market expert Stefan Riße, for reasons other than the Middle East crisis that's causing waves. The possibility of an imminent US attack on Iran, as suggested by a Bloomberg News report, isn't giving investors sleepless nights, according to Riße. Here's what he thinks investors should be concerned about instead.
Politics and Military Intervention
Trump's playful banter about possible US military intervention in the Israel-Iran conflict may be amusing, but Rièse assumes the impact on stock markets would be minimal if the US were to intervene. The US's military prowess is so formidable that neighboring countries would be hesitant to challenge them, Rièse believes.
What's more, a regional conflagration isn't likely, Rièse opines. He expects oil prices to stay stable, with only a margins' bottleneck in supply should tankers be prevented from passing through the Strait of Hormuz, a critical passage for oil transport. China could be the exception, since it imports more oil from Iran compared to Western countries. However, China could potentially offset this by importing more oil from Russia.
Despite this optimistic outlook, Rièse hints at potential risks with Pakistan, a nuclear power, however, he doesn't consider it a threat at present.
Economy and Inflation
However, it's not the Iran-Israel conflict that Riße considers the biggest threat to stock markets. He points to the unresolved US trade war as the more significant risk. The dilemma of a potentially looming recession or even stagflation holds investors' attention, Rièse highlights.
The prospect of increasing inflation rates in the coming months is worrying, Rièse remarks, especially with the oil price hike fostering inflationary pressures. This inflation, coupled with the economic impact of the tariffs and immigration policies, could create a perfect storm, damaging investment sentiment.
"I wouldn't personally sell stocks because of the Iran war," says Riße, "but we're generally more cautious at the moment." Despite the opportunities presented by undervalued stocks, Rièse advises a more conservative approach given the market's current valuation and uncertainty.
Sources: ntv.de
- Stock prices
- USA
- Iran
- Middle East conflict
- Despite the ongoing Middle East conflict and the potential US military intervention in the Israel-Iran situation, it's the unresolved US trade war that capital market expert Stefan Riße deems the bigger threat to stock markets, particularly due to the prospect of increasing inflation rates and the economic impact of tariffs and immigration policies.
- Riße suggests investors to be more cautious due to the currently high market valuation and the uncertainty surrounding the trade war, even though there are opportunities with undervalued stocks.
- While the Iran-Israel conflict might not significantly impact stock markets if the US were to intervene, Riße further warns about potential risks with Pakistan, a nuclear power, although he doesn't consider it an immediate threat. In terms of business and finance, Rièse sees the employment policies and community policy of the USA as important factors that may have an impact on various sectors.
