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...since the inauguration, investors as well as corporations and small businesses have been dealing with a mountain of uncertainty.
On April 2, Donald Trump threatened to levy tariffs on several nations. This is in addition to the tariffs he has already imposed on China, Mexico, Canada and now global auto producers. The question is whether the “if” in tariffs is still possible.
No, it isn’t. The president is making good on his campaign promises to create an even playing field between the U.S. and our trading partners. Steel, aluminum and the global auto tariffs he recently announced are only the beginning.
Unlike his first term, this time around his tariff initiatives will be “extensive, explicit and enforced,” as one hedge fund manager told me. That will be bad news for the financial markets but there may be a silver lining.
I have often said that markets can absorb and adjust to both good news and bad. If the trends are negative, investors and traders can hedge their portfolios, or move to the sidelines. Good news, as we all know, is much easier. Buy what you can and as much as you can. What the markets cannot deal with is uncertainty.
My readers are old enough to remember the presidential elections. The narrative among financial markets was that the country under Trump’s presidency would mean four years of higher corporate profits, rising stock markets, the end of our debt crisis, and the Ukraine conflict.
Sadly, many investors, traders and company managers focused on the positives but ignored the negatives. The financial markets and many voters bought into the campaign promises of the winning candidate lock, stock and barrel. It is understandable. In populist times like this, hope springs eternal once every four years during presidential elections.
However, since the inauguration, investors as well as corporations and small businesses have been dealing with a mountain of uncertainty. Radical and sudden change will do that to you. Few had done the math on what tariffs or downsizing the government would do to the economy and inflation. How exactly would the president reduce the nation’s debt or end the Ukraine/Russian war, and what would the downside be?
Those issues were dismissed as negotiating tactics or, as part of America’s long tradition of campaign promises, were never meant to be kept. Instead, we discovered that Donald Trump was deadly serious in his intentions to radically transform the nation and its political and economic system quickly. “Burn it all down,” was not just a stump speech.
The changes taking place in downsizing government and reducing the workforce are ongoing. No one, not even the Fed, knows how this will turn out. Uncertainty has become a popular word. Fed Chair Jerome Powell used the word ‘uncertain’ 22 times during his March 19 Federal Open Market Committee meeting remarks.
If you throw in the daily threat of tariffs, you have a perfect storm of uncertainty. Donald Trump’s on-again, off-again, tariffs have left investors uncertain and stressed out with their finger on the buy or sell trigger hourly. That is why the S&P 500 Index is off by more than 10% while markets overall are experiencing 1-2% swings in the averages almost every day.
The announcement of tariffs will remove at least one level of uncertainty from the markets. Of course, that won’t resolve the issue in its entirety, but it might help to calm the markets for a little while — until the next shoe falls.
We do not know what our trading partners will do, or what the U.S. response will be to their reactions. They may retaliate or they may negotiate. In addition, we still need to grapple with the rest of Trump’s initiatives and their impact on the economy, inflation and employment. That can take another 3-6 months.
Unfortunately, after two-plus years of great returns, investors are paying for those gains this year. On June 27, 2024, in my column, “What can investors expect from the coming era of populism” I warned readers that in the last populist era between 1964 and 1982, stocks went nowhere — except in election years.
As for the short-term, I expect more of the same in markets. I predicted a dead cat bounce last week and we got that for two days. However, the auto tariff announcement ended those gains. We could see the market test the March lows before another move-up sometime in April, although once again it would be temporary. Alas, we are Trump-dependent, and he is no friend of the stock market nor are many of his voters. Why would that be the case?
Many of his following have little if any savings and none in the stock market.
In the last election, Trump captured the vote of lower-income household voters who earned $50,000 or less, while those making $100,000 or more voted for Harris.
It seems a safe bet that the stock market is meaningless to many of his supporters, although not all. I would hazard a guess that the stock market rout to them is simply another example of how the deep state works to undermine the president’s initiatives, at least according to the comments I have read from far-right media figures.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires.
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A variety of artwork by children and adults will be on display at Hunt Library beginning April 5.
Patrick L. Sullivan
FALLS VILLAGE — There will be a reception for the new art show at the David M. Hunt Library Saturday, April 5, 4 p.m. to 6 p.m.
The show, “Playing with Art,” is a group show with work from adults and children, including quilts and new work from local artists including Danielle Mailer, Ken Musselman, Erika Crofutand Robert Cronin — among others.
Children’s artwork from a tissue paper collage workshop conducted by Breetel Graves will also be part of the show.
Also part of the show is restored vintage 1970s film animation based on a book of Grimm’s Fairy Tales by Eric Carle.One of the films, The Fisherman and His Wife, was an Academy Award finalist for best animated short in 1979.These animated cartoons will be shown on Friday, April 18 at 3 p.m.
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SALISBURY — The Inland Wetlands and Watercourses Commission voted unanimously in favor of adopting a long-awaited update to its regulations at its March 24 regular meeting.
Following approval from the IWWC, the document will now undergo review by Connecticut’s Department of Energy and Environmental Protection. “If all goes well,” a public hearing with the town regarding the regulations will follow on May 12, IWWC Chair Vivian Garfein said.
In the draft sent to the Department of Energy and Environmental Protection, the lakes are given a 75-foot upland review area, but each of the four major lakes — Wononscopomuc, Wononkapook, Washining, and Washinee — is given its own line, allowing for future discussion of the lakes as separate entities. The upland review area has seen disagreement between the IWWC and lakeshore property owners, with several commission members wishing to broaden upland review areas around the lakes but receiving pushback from residents.
Garfein said that any lake association that would push for changes to the upland review area of a lake will present their testimony at the public hearing, where the Commission may discuss, and potentially vote, on any alterations to the regulations.
The new draft updates the previous regulations, which were established in 2006.
First Selectman Curtis Rand, speaking in the public comment section of the meeting, commended the IWWC’s work in finalizing the regulations. “I really appreciate all the work you’ve put into these regulations,” he said. “It’s been a long time coming and thank you.”
The commission also discussed in detail the “‘Allowed’ Activities Not Requiring a Permit” document, which is intended to be an advisory guide for residents on what types of activities they may conduct in or near waterways that don’t necessitate an application to the IWWC.
After a lengthy discourse on the specific language of the document, the Commission decided to table the issue until the next meeting.
When completed, the document will be publicly available on the IWWC’s webpage.
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Beware an unfettered presidency
When America’s Founders wrote the Constitution in 1787, the world had no democracies. Countries across the meridians were led by all-powerful kings and other dictators. An example was George III, the British monarch, who treated the American colonists as mere vassals who could be wantonly taxed despite their lack of representation, in whose homes British troops could be quartered at whim, and who constantly harassed colonial shipping in international waters — among other arbitrary activities backed by military force. This King, as is characteristic of dictators, eventually overplayed his hand and the thirteen colonies rose up in revolt.
The great genius of James Madison and his colleagues was to create the first true democracy in history, going far beyond the semi-democratic practices of ancient Greek cities and Swiss canons. They insisted on the sharing of power across three “departments” of government: the executive, legislative and judicial.
Their novel Constitutional endeavors had an overriding objective: to guard against the dangers of tyranny. Above all else, the Founders were imbued with anti-power values. No more autocratic leaders like King George.
The core philosophy guiding the Founders was to distribute power across three “branches” of government, as a means for limiting its potential abuse by any one branch. As Lord Acton would state in his famous aphorism a hundred years later, “Power corrupts and absolute power corrupts absolutely.” Long before Action, the colonists understood this principle. By establishing separate institutions — executive, legislative and judicial — “ambition would be made to counteract ambition,” as Madison stated the case in Federalist Paper 51. In this manner, no branch would grow so mighty as to dwarf the others or dictate to the American people.
Justice Louis Brandeis eloquently expressed the spirit of the Founders in a case that came before the Supreme Court in 1926 (Myers v. United States). “The doctrine of the separation of powers was adopted by the [Constitutional] Convention of 1787,” he wrote, “not to promote efficiency but to preclude the exercise of arbitrary power. The purpose was not to avoid friction, but by means of the inevitable friction incident to the distribution of governmental powers among three department, to save the people from autocracy” [emphasis added].
In contrast to this wise approach to governance, a more recent school of thought has embraced the concept of a “unitary” presidency. What becomes all-important in this approach is a powerful engine to move the nation forward — an unfettered president free to shape a nation’s destiny as the White House sees fit, without the interference of “checks-and-balances” from lawmakers on Capitol Hill or members of the Supreme Court. In this model, now in place in the United States, the legislative and judicial branches are largely supine to the will of the Oval Office and the president’s minions spread across the agencies of the executive branch.
The greatest achievement of the Founders — their establishment of safeguards against the use of absolute power by a single individual or branch of government — is currently being erased. It is a troubling time in the nation’s history, with liberty hanging in the balance. A starting place to restore our form of democratic restraints on arbitrary power is to support those members of Congress and the judiciary who understand the Constitution. Our fate depends heavily on America’s representatives and judges as independent guardrails in this struggle to continue our long and admirable history of shielding freedom against the forces of tyranny.
Loch K. Johnson taught political science for forty years at the University of Georgia, while also serving intermittently as a senior staff aide in the White House, the Senate, and the House of Representatives, and as a Fellow at Oxford and Yale Universities. He retired to Salisbury in 2019. Professor Johnson is the author of The Third Option: Covert Action and American Foreign Policy (Oxford University Press).