The Most Beautiful Word in the Dictionary

Trump's Interview with Bloomberg

In a recent interview with Bloomberg's Editor-in-Chief, John Micklethwait, former President Donald Trump referred to 'tariff' as "the most beautiful word in the dictionary". The discussion mainly revolved around the economy, with Trump defending his policies against the Congressional Budget Office's analysis. The non-partisan office stated that a second Trump presidency would increase the federal debt by $7.5 trillion, while Kamala Harris' program would add $3.5 trillion. Trump's response to this was to suggest that he would build a "tariff wall" that would be paid for by others. He further suggested that his plan for growth, coupled with tariffs, would be enough to cover sweeping tax cuts as companies would relocate production inside the United States.

Trump on Tariffs

To further illustrate his point on tariffs, Trump recalled a conversation with an auto executive. He claimed that large-scale automotive factory projects in Mexico were abandoned once it became clear that he was running and competitive in the presidential race. He stated that if he were to run the country, he would impose a massive tariff, which led to a slump in the Mexican Peso. Europe was also a target of Trump's criticism. He complained about the imbalance in the automotive market, with far fewer American cars sold in Germany compared to the number of German cars sold in America. Trump suggested that high tariffs would force European automakers to relocate production to the USA.

Harris's Interview with Charlamagne Tha God

While Trump was discussing tariffs with Bloomberg, Vice President Harris gave an extended radio interview with Charlamagne Tha God. The Harris campaign has been losing ground in recent days, particularly with male voters. Betting markets now indicate that Trump is most likely to be the next President. The interview covered various issues, including Harris' support for the legalization of recreational marijuana, her views on Trump, and the concept of reparation payments for African Americans.

Approaching the November 5th Election

As the November 5th election date approaches, the Treasuries curve has seen some changes. Recent flattening has been mainly due to the rising short end yields as exuberance over potential rate cuts collided with higher than expected payrolls and CPI figures. San Francisco Fed President Mary Daly suggested that the Fed could skip a cut at one of the two remaining policy meetings this year. This stands in contrast to Jerome Powell's suggestion that the Fed was likely to cut by 25bps at each meeting.

Inflation Pulse Fading

While bets on the pace of cuts in the US are pared back, the inflation pulse seems to be fading fast almost everywhere else. The final read of September CPI in France saw the year-on-year EU harmonized figure revised down 1-tick to 1.4%. Canadian September CPI undershot expectations by two-ticks to sit at 1.6% y-o-y. New Zealand’s Q3 CPI also printed a little softer than expected to take the annual headline rate to just 2.2%.

Bottom Line

While 'tariff' may be the most beautiful word in the dictionary for some, in financial markets the most beautiful words are still 'rate cuts!'. What are your thoughts on this? Do you agree with Trump's views on tariffs or do you side with Harris? Share this article with your friends and let us know your thoughts. Don't forget to sign up for the Daily Briefing, which is every day at 6pm.