Trump's bold move: Is a universal dividend on the way?
On August 3, Trump dropped a bombshell as he left the New Jersey golf club: he plans to use tariff revenue to distribute 'dividends' to low- and middle-income Americans!
Once this statement was made, the market went into a frenzy! By August 6, CME pre-market S&P 500 futures surged by 1.2%, and Asian investors were ecstatic!
Does this have a hint of 2021's 'massive liquidity'? Will this 'dividend' cause the US stock and crypto markets to soar? Come and see!
'Dividend' situation?
What did Trump say: On August 3, he revealed that tariffs had generated 'tens of billions' and that payments might be given to low- and middle-income groups, similar to the stimulus checks during the pandemic.
Background: Trump's tariff policies (such as 35% on Canada and 15% on the EU) have generated massive revenue, some of which is earmarked for the 'dividend' plan.
How to view it: Stimulating consumption, boosting the economy, and enhancing political favorability, Trump is executing this move skillfully! However, the specific amount and timing are yet to be determined, so the market is celebrating in advance!
How is the market reacting? On August 6, CME pre-market S&P 500 and Nasdaq futures rose by 1.2%-1.5%, and the Nikkei 225 and other Asian stock markets also saw slight gains. Why are Asian investors so excited?
Consumer Boom: Dividends may boost US retail and benefit Asian exports.
Tariff Easing: On August 1, Trump reached an agreement with Japan and Vietnam on low tariffs, slightly clearing the clouds of the trade war.
Dollar Volatility: Inflation expectations may pressure the dollar, while Asian assets rejoice!
Opportunities and Risks: Opportunities:
Stock Market: Dividends may ignite a consumer frenzy! Tech and retail stocks stand to benefit.
Crypto: Distributing money = increased liquidity, the dollar may weaken, Trump also supports crypto, and the crypto market is expected to recover.
Risks:
Inflation: Tariffs + dividends could drive up prices, shattering the Fed's rate cut dream (September rate cut probability 90%).
Uncertainty: The details of the dividends are unclear; if not implemented, the market may be disappointed. Tariff negotiations (with Canada and Taiwan) are still pending, with significant volatility risks.
