A conversation with Phillip Michals, Executive Chairman/CEO of A.G.P./Alliance Global Partners
It seems that there has never been so much movement on the economic front as there has been since Trump took office in January. That movement can be either seen as good or bad, which creates volatility. How do you view it?
I think you’re right. Trump is very unpredictable. In the short term, it’s very difficult to time the market and get any sort of vision on what he’s going to do. Domestically, he’s utilizing tariffs as a means of getting jobs back into the country, and we don’t know if this is a negotiating point to have other countries lower their tariffs or if it’s truly his belief that this is a way of bringing manufacturing back to the US.
My view is that the tariffs are going to be heavier in the beginning of his administration, and he’s going to lighten up, with some of it being negotiated away and others targeted and left in place. But I don’t think there will be 25% or 30% tariffs that are going to cover every industry and sector. So I think it’s going to be choppy, but in six or 12 months from now, we’re going to have clarity on his policies, which is what Wall Street is going to want. As much as he says that he’s not looking at the markets, historically he has judged himself on the performance of the stock market as a gauge of how well he’s doing.
Why haven’t we seen more volatility from the market considering how uncertain things are right now? Why aren’t investors more nervous?
They look at Trump as more transactional in nature and not so ideological. There’s a significant amount of the marketplace that views all of this as a negotiation tactic, and not that he’s ideologically going to have tariffs across the board. So they don’t think that the tariffs are going to be as dramatic as he’s stating they are.
Which sector of the market do you see being most affected by this?
For sure the car industry right now. If you want to buy a foreign car, you could be paying 25% more from April 1. That’s going to automatically have an effect on any cars not made in the US. That’s something we’re going to start seeing tomorrow. As we go along, we’re going to see which sectors and industries will be affected more than others as they start to do some carveouts.
Are there a lot of Canadian companies on Wall Street, and how are they doing?
The thought is that Canada is going to have to make a deal with the US, and the US is ultimately going to want to make a deal with them. There’s probably an 80/20 trade imbalance between the two countries right now. Meaning that if there was a long-term trade war, it would affect them significantly more than it would affect us. They can’t afford a long-term trade war, so they’re going to have to make a deal. But in the short term, it’s definitely going to affect their sectors across the board, and steel and wood, in particular. For us, there are certain types of bourbon and maple syrup that are going to be affected, but it’s not going to be across the board on our side as much as it will be on theirs. It’s already affecting their economy in a negative way right now. But when you ask why the market isn’t more dramatic and why it isn’t down more, I think it’s because people think that Canada and the US will have an agreement six months from now.
Let’s discuss Elon Musk and his companies. He has put himself in a position where a businessman has become a polarizing political figure in a very unique way. What are your thoughts on that situation?
From a public relations standpoint, he’s alienating 47% of the people out there, and that 47% was probably his old customer base. Those were the ones more likely to buy a Tesla than the other 53% of the population who may either be independent or Republican. So from that standpoint, I don’t think he wanted to be in this polarizing position.
I think that his view is “What do you dispute on the cuts?” Is there much disagreement with the cuts that he’s making in government? Aren’t both Democrats and Republicans against waste, fraud and abuse? The answer should be yes. The issue is probably the way it has been communicated and gone about, but the end result is going to be hard to argue with, because both sides are going to be for that. That’s what they have to communicate better—what they’re finding—and then there won’t be too many people lined up against that part of it. But the way they’re going about it is polarizing.
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