A province in India once had too many cobras, so they incentivised the capture of these snakes
Except then people began breeding cobras to earn the reward…
Meaning more cobras, not fewer – an “Unintended Consequence” (UC)
This is relevant because the UCs of Trump’s policies are everywhere, and his efforts to MAGA are MIGA (Making International Great Again)
Take defence spending where Trump wants other NATO countries to (rightly) spend more. This could’ve been fantastic for US companies like Lockheed Martin
But former US allies were so shocked by the suspension of military support to Ukraine that they no longer want to risk being reliant on the U.S.
With the UC being that Canada, Switzerland, Portugal, and Turkey (so far) are “reviewing” US F-35 orders, swapping them for European jets
Or semi-conductor chips where the U.S.’ efforts to deny China access to Nvidia’s latest chips unleashed the creativity that spawned Deepseek
With the UC likely to be fewer chip orders for Nvidia
Tariffs on Chinese imports negatively impact small Chinese businesses but what about the UC of lower advertising spend for some US tech giants? “China-based sellers account for significant portions of our third-party seller services and advertising revenues” (Amazon 10k)
The 51st State rhetoric is having the UC of a Canadian consumer backlash – Flight Center reported February bookings to the US down 40% y/y
DOGE’s objectives are worthy – cut wasteful government spending and reduce the deficit. But if private spending doesn’t immediately replace this government spending, there’ll be economic shocks
And we’re only just discovering where
The 700k fired government employees are crashing the housing market in DC with inventory up over 40%
United Airlines recently announced weaker demand saying Government spending is down 50%. Those fewer flights mean fewer: hotel stays, taxi rides, restaurant meals, and the multiplier effect of lower spending by those waiters, baristas, and taxi drivers in a service-driven economy
The bottom line is surely huge earnings uncertainty for many US companies
Which may MIGA
Because the shift from U.S. fighter jets to Typhoons benefits European companies
Consumers shunning Teslas in Europe and China benefits EU and Chinese EV makers
The move away from iPhones in China benefits Chinese and Korean phone manufacturers
Retaliatory tariffs on US grain exports benefit Brazilian exporters
And the Canadian “staycation” will benefit Canadian hotels & resorts
Because despite the MAGA rhetoric, America has had it very good for a long time
That’s why their companies are “priced for perfection”
In a very imperfect world
Q1 earnings season will reveal just how imperfect, but upside earnings surprises seem unlikely
Perhaps the best way to protect yourself from any unintended consequences of MAGA is to be diversified internationally
MIGA
Disclaimer
Not advice, do your own work
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A province in India once had too many cobras, so they incentivised the capture of these snakes
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