The collapse of the bags since Trump is president: the « black swan » of Wall Street who canceled the end of year rally

The last two terrible days on the financial markets are venturing the hypothesis of the black swan of the bags caused by the Trump era. The « most violent American protectionist maneuver of the last 95 years », to say with the words of the editorial of Federico Fubini thinking about the Smoot-Hawley Act of 1930, he is upsetting the balance of the stock exchange indices. But it is not necessary not to be taken by alarmism, while recording the collapse of the main lists in those who became Thursday (and Friday) black) world bags, at least for five years now. The latest telluric sum of this reach in Milan was on March 12, 2020 when Piazza Affari lost 16.92% with Italy overwhelmed by Covid and the containment measures imposed by Lockdown.

The idea of ​​protectionism and equity courses

And then let’s start with the numbers, because those never lie. We took into consideration on November 5, 2024 as a dirt date: Day of the officianization of the victory of Donald Trump in the race to the White House. We can start the analysis from 20 January 2025, the day of his settlement and the speech to Capitol Hill in Washington in which he outlined this new commercial policy in no uncertain terms Which breaks 80 years of alliances and multilateralism, above all shatters the idea of ​​ »collective West » to the American guidance that came out of the ashes of the Second World War and then designed concretely by the Marshall plan.

The scenario and numbers from November 5, 2024

But we thought of expanding the analysis in November 2024 because it is the day of Trump’s victory that changes the scenario. We definitely know that the biden and democrats in the White House has ended, Donald Trump returns in the role of Commander in Chief of the first world economic (and military) power. So we think in absolute terms avoiding panic. In the infographic that you can see on this page we have analyzed the trend of the main price lists in the last 5 months. The analysis can only start from the Dow Jones (But it can also be extended to the Nasdaq index, the Wall Street technological), also takes the FTSE MIB of Milan, the FTSE 1000 in London, the DAX of Frankfurt, the CAC of Paris and also offers a perspective of the gearbox between Euro and Dollar, the main financial thermometer of transatlantic relations.

The trend of the Dow Jones and the contradictory phases

So we discover that the Dow Jones on November 5, 2024 at 9.30 pm touched 42,140 points, on April 4th we are at 40,913 points, further down if we think about the last day of the biden era. While there were two phases. For example, on January 30, 2025, just ten days after the settlement of The Donald, the index had exceeded 45 thousand points by registering its maximum. It means that there was a first honeymoon between Wall Street and The Donald who now seems to be questioned. Because in the performance of the last few months the loss is about 5%. It must be said, however, that from 2017 to today Wall Street had probably sitted on a price bubble, considering the assessments in the price between price and profits of the main American companies. Just think that, in peak, Tesla had come to quote future profits and other Big Tech uses around 25 times over 125 times.

The main price lists in Europe

While the FTSE MIB index of the Milan stock exchange in the last 5 months has remained substantially unchanged always within two contradictory phases. Because on November 5, 2024 the main index ended at 34,472 points, on April 4, travels around 35 thousand points Considering on Thursdays and Black Friday this week with an overall loss in the order of 10%. Because in the meantime, in these five months, Milan has had a bullish trend, even raising 39,712 points on March 19 last. Similar trends for London, Paris and Berlin, with the peaks around 3-4 March and 20 March And then the subsequent recovery of the last two months. So it is as if the benefits of the five months of Trumpism in which the bags had had to celebrate had evaporated in just two days.

The euro dollar exchange rate

The analysis on the exchange relationship is interesting. Currently exchanged 1 euro for 1.10 dollars, but on November 5, 2024 this ratio was at 1, O9. So we are in line with the end of the biden era. In early January 2025, shortly after the settlement of the new administration to the White House, the exchange rate between the euro and dollar was however slightly less than 1.03. Two months of erratic economic policies managed to realize the dream of a dollar sold in a low manwith a positive effect for the most effective US payments balance than the introduction of commercial barriers, because it can encourage American exports to the rest of the world and penalize European ones. The euro thus touched 1,1105, on the maximums since the beginning of October 2024.

The theorem of imbalance in the commercial scale

The markets reason about the macroeconomic prospects incorporated in prices and the new Trumpian framework seems to be supposed to make a transition towards another paradigm made of fences between countries, Heavy tariff barriers animated only by the polar star of the commercial scale which however does not take into account the enormous surplus generated by the United States against the collective West if we think in terms of Tech services. But the will of The Donald is to grow the private sector, thanks to the growth of the national manufacturing protected by the dumping of foreign competitors with heavy duties, less driven by the public budget (more duties, less income imposed) and partial rebalancing of the commercial balance. The markets think in perspective and at the moment it is evidently a picture that does not convince too much.

Protectionism and the era of the WTO

Close to an old way protectionism does not present positive examples in history if we consider that the 1930s led to the great depression and totalitarianisms in Europe. But it is clear the reasons for re -enacting the bags. What is certain is that we are in front of a substantial change in world trade, the end of the model that had in the WTO, the World Commerce organization, the compensation room and which led to the entrance of China in 2001. The distortions have been there. Beijing has been repeatedly accused of making dumping, that is, of selling on the world markets at a lower price of the production cost, flooding them with discounted goods However, they have probably been able to keep inflation artificially also in Europe.