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Foreign Affairs That Hit Home

October 15th, 2019

The economy recently has had some interesting developments. Some are just the aftermath of old wounds, and others are brand new situations. From the oil and energy sector to the trade war, the market and global economy have been reacting in a rollercoaster fashion. Staying up to do date with the current events on an international level is important to understand what is happening in our own economy.

As if it doesn’t have an end, the trade war continues to shift from good to bad, and sometimes worse. The lack of progress in the trade ward caused the market to sink multiple times. However, the market is more susceptible than one would think to a simple phrase. After the trade talks ended on the 10th, President Trump told the media that trade talks went “very well”. The markets received a healthy boost from this information. Wall Street wants to have a good outcome to this, mostly because every day that this trade quarrel continues, is another day that the global economy suffers from the two largest economies being at odds with each other.

But why exactly are we shifting back and forward without any clear outcome insight? Well, Panos Mourdoukoutas of Forbes magazine states that this is because the Trump administration has two different goals for the outcome of this trade war. On one hand, many of Trump’s cabinet seeks to isolate China in an attempt to force them into changing their political and economical systems. Much of this is due to the treatment of the people and the imbalance in the trade that their economic system creates. Others in the White House look to eliminate barriers to free trade and put an end to intellectual theft. Granted, the U.S. and China have had a very lucrative relationship between each other for quite a few years. But at this point in time, the entire Trump administration is committed to showing China who has the biggest stick in this fight. Trump and President Xi are continuing talks through today and we will know what progress has been made soon.

In other global news, the oil market has felt the effects of Iran’s bold moves on oil tankers in the Strait of Hormuz. U.S. oil saw a rise in price per barrel, as well as most all oil,  did due to the attacks on the Saudi Oil facilities allegedly carried out by Iran. Iran at this time is denying any involvement. Which is a little harder to chew considering the hostilities following the Trump administration’s announcement to withdraw from the Tehran nuclear deal, as well as announcing harsh sanctions on Iran’s crude oil industry. There have been missile attacks on Iranian tankers as well. Not to mention the Iranian seizure of a British oil tanker. It is unclear how long this game of battleship will continue, but as long as it does we can continue to see oil prices rise.

Trump is certainly ruffling some feathers preparing for the last year of his term. Although the outcome of these situations is unclear, it is apparent that the stock market is looking like it might recover from a turbulent two weeks. If trade talks continue on good course like Trump has said, we should be looking towards some brighter days. If not, at least a little more stable.