Top economist: Trade War cools down, but economics will feel pain

Top economist and market analyst Bob Elliott sometimes does not understand much of the optimism that prevails on the financial markets. “The markets do not care that there are no agreements to reduce the taxes, but against the effective levy of 15% that now applies, the real economy will soon experience pain,” said the economist.

The economy will experience pain

For the time being we are not yet seeing it in economic data, but someone must of course wear that 15% levy. If it does not become the companies, they will pass it on to the consumer, who then has to take price increases of 15%.

Depending on the industry, a margin of 15% is already fantastic for companies. It would disappear completely due to the taxes.

According to Elliott, it is therefore important that the taxes disappear as quickly as possible, because otherwise we will have problems with the economy, and also with the markets as an extension.

Because what would be the effect of this?

Economic

If there is actually an economic delay, then that will be at the expense of the business profits, and that pulls the stock prices down. In no time, the US Central Bank is then faced with the decision to support the economy.

For the stock market, that will initially mean a slap down. That is what Elliott also seems to do. He suspected that the market is currently underestimating the risks.

And somewhere that sentiment is to understand, because Bitcoin and shares are dangling around all-time high.

At the same time, this could turn out positively for Bitcoin in the slightly longer term. Certainly if the US government and central bank actually intervene if things go wrong, and that chance is high. After all, they have always done that to date.

Certainly with someone like Donald Trump in power, it is unlikely that interest rates will stay at the same level for a long time. He will also demand that the Central Bank will stimulate the economy firmly by buying financial assets.

In that respect, the question is how long a correction will really last, should it take place soon.