As an investor in the stock market, I was disappointed with the new tariffs imposed by President Trump-10 % of imported from China, 25 % imported from Mexico and Canada, including 10 % duty of Canadian energy imports (oil, natural gas, natural gas, ,electricity). If these tariffs are not resolved all year round, the company’s income may be at a rate of 2 % -3 %, which means that the S & P 500 Index is also not surprising.
Unsurprisingly, the retaliation speed is fast. Canada is about to become the Prime Minister Trudeau imported by a 25 % tariff on US $ 155 billion in US imports, with the goal of alcohol and fruits, which may have a significant impact on major US exporters.
At the same time, Mexican President SHEINBAUM rejected Trump’s claims on the cooperation between Mexico and criminal organizations, and imposed its own retaliatory tariffs on American products. She also suggested that the United States should focus on fighting and money laundering with family drugs, rather than blame Mexico.
We should expect to take revenge from China soon. In the last US-China trade war, many American companies and consumers undertake the cost of tariffs on Chinese commodities at higher prices, while some Chinese exporters have reduced prices to maintain competitiveness.
This is an analogy of “standing at the concert”-if a person stands up, the row behind them must stand up, and no one will be better. The tariff war often follows the same mode, so the logic result is compromise. The question is: How long must the market tolerate the market before this happens?
The trade war may promote the housing industry
Everyone knows that tariffs have damaged the global economy, which is why rational Trump may talk about compromise. However, as new tariffs on European products also appear on the desktop, it is unclear how the world leaders will reach an agreement before consumer confidence will be severely hit.
Although the market is disappointing, as a real estate investor, I see a benefit: the trade war can promote housing prosperity.
Initially, due to the short -term inflation pressure of imported goods, the yield of fiscal bonds may increase. However, in the middle period, with the upgrading of trade tensions, capital should flow from stocks (such as stocks) into bonds and increase their yields. If the global slowing rate will increase, the interest rate of mortgage loans may be greatly reduced, thereby increasing burden and stimulating housing demand.
When the burden of housing increases, real estate transactions, reconstruction projects, purchases, garden greening work and mortgage loans are the same. The housing industry is the main driving force of the US economy, usually 15 % -18 % of GDP. Due to the shortage of housing and the need to be suppressed, lower interest rates may re -ignite the bidding war across the country.
Real estate as a “bond plus” investment
I have never made a lot of interest in bonds (about 2 % of net assets), because I prefer high -risk and higher investment. I regard real estate as a bond replacement plan, providing potential appreciation, increasing rental and tax advantages. In the past 22 years, my real estate holding rate is better than the Treasury coupon and the total bond index. I hope this will continue.
Of course, it is not passive to have physical real estate. In the past weekend, I spent three hours and drew my old house after the tenants moved out. Next: Replace grouting, washing, deck modification and garden greening front courtyard. When I like to show excellent products, it takes time to maintain work to get rid of other pursuits.
As I grow older, I find that I will naturally turn to more online real estate investment and stay away from the ownership of physical property. It’s simpler and lower to maintain the attractiveness of life. Just as the interest rate of mortgage loans is declining, the housing market may be like the housing market.
Use the stock market to sell
Former President Donald Trump launched a major trade conflict during his last term. The most famous is the beginning with China, starting in July 2018. Essence The tension situation leads to market fluctuations, and then reaches the climax in the first phase of the trade agreement in January 2020, which relieves some controversy.
On July 18, 2018, the S & P 500 index was 2,800, and then sold to 2,485 on December 18, 2018, a decrease of 11 %. However, by January 2020, the market has rebounded to 3,300, an increase of 32 %. If history is repeated, more than 10 % of correction may bring strong buying opportunities.
The current market callback will always feel pain, but they are not new. Since 1950, the Standard 500 Index has been corrected every 19 months. Since 1980, the average annual decline has been 14.3 %, which has made the decline in double digits relatively common. At the same time, a bear market occurs once every six years (decreases 20 % or more).
Given that I am currently underweight public stocks, I am eager to buy dipping sauce. But what else makes me even more excited? Buy dipping sauce for my children -I hope they will enjoy 10-15 years when they are in high school or college.
Readers, how long do you think this trade war will last? Will it push capital to real estate and make house prices higher? How do you position investment?
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