Markets were rattled by policy under Trump 1.0 by his unpredictable and chaotic nature. Trump 2.0 promises to be more of the same. Other than the transactional nature of Trump’s deal making, what’s his ultimate end game?
It’s to undo the effects of globalization. The political backdrop can be explained by Branko Milanovic’s famous “elephant chart”. The graph charts percentile of global income distribution, or how rich you are on a global scale, on the x-axis, and the changes in real income between 1998 and 2008 on the y-axis. The winners of globalization were the emerging market countries whose population were lifted out of poverty and the elite of the industrialization countries, who engineered globalization. The losers were population in subsistence economies and the middle class of the industrialized countries, which has sparked populist backlashes such as the Make America Great Again movement, the AfD in Germany, the National Front in France, and so on.
Trump rose to power by tapping on the deep political discontent of globalization of MAGA Americans. Here’s what this means for investors.
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