SINGAPORE (Aug 27): US policies — on foreign affairs, trade, fiscal as well as monetary — are creating geopolitical and economic uncertainties globally and are, in the process, causing havoc in stock, currency and commodity markets.
While there can be no winner in a trade war, threatening a trade war has benefited the US. This perhaps may be US President Donald Trump’s real strategy?
US stocks and the greenback are benefiting from investor flight to safety at the expense of perceived riskier emerging markets, so far. The Standard & Poor’s 500 and Dow Jones Industrial Average are at or near all-time highs, in stark contrast to the dismal performance of non-US stocks for the year to date (see Charts 1 and 2). The greenback has also strengthened against most emerging market currencies (see Chart 3).