Following the latest round of tariffs, it\u2019s only a matter of time before the other economic shoe drops, according to one investor who predicted the 2008 stock market crash.<\/p>\n
Danny Moses, the founder of Moses Ventures who was made famous by the book-turned-movie The Big Short, warned that despite some strong economic indicators in the face of tariff uncertainty, signs of stagflation are already upon us.<\/p>\n
\u201cThere\u2019s just so many moving parts right now that it\u2019s really hard to decipher where you\u2019re going to pinpoint,\u201d Moses told Fortune. \u201cAnyone can find a data point that says it\u2019s inflationary, and someone can find a data point that says it\u2019s not. So it\u2019s just difficult. But bottom line \u2026 Is the [economy] going through a stagflationary period? It appears to me, it is.\u201d<\/p>\n
President Donald Trump announced on Friday a new round of sweeping tariffs<\/a>, including a 39% tax on Swiss exports and a 35% tax on some Canadian exports to the U.S. The administration is extending the trade-deal deadline to other countries including Mexico, America\u2019s largest trade partner, which is getting an extra 90 days. The logic behind the tariffs differs slightly from previous rounds, where Trump has argued for levies as a means to eliminate trade deficits<\/a>. The U.S., for example, has had a trade surplus with Brazil for about a decade. Instead, Trump has imposed steep tariffs on Brazil for political reasons<\/a>, such as the prosecution of ally and former Brazilian President Jair Bolsonaro, who was accused of plotting a coup following his loss of the presidential election.<\/p>\n Markets dipped<\/a> after the announcement\u2014as well as a weaker-than-expected jobs report<\/a>\u2014 following a weeklong rally of strong earnings and fading trade-war fears. But Moses said the latest round of tariffs have once again stirred anxiety over the economy\u2019s future, making investors \u201ca little bit more concerned about the unpredictability of what\u2019s coming out.\u201d<\/p>\n \u201cNobody knows how this is going to pan out, because this type of thoughtless tariff is unprecedented,\u201d Moses said.<\/p>\n Where\u2019s the stagflation?<\/strong><\/p>\n Fears of stagflation, or the stagnation of economic growth coinciding with inflation, have been easing<\/a>, particularly following the Wednesday GDP data showing a rebound in U.S. economic growth<\/a> in the second quarter of the year. This followed a negative first-quarter GDP estimate<\/a> that was largely a result of the timing of trade chaos forcing companies to stockpile goods before pricing in consumers purchasing that inventory. Ultimately, the second-quarter growth undid the first quarter\u2019s contraction, though economic growth slowed in the first half of the year.<\/p>\n White House spokesperson Kush Desai told Fortune in a statement that recovering growth and \u201ccooling inflation \u2026\u00a0suggest stagflation is simply the latest buzzword for panican [sic] paranoia.\u201d<\/p>\n Moses said the economy has not yet seen the full impact of the tariffs. Fed Chair Jerome Powell held interest rates steady<\/a> this week and said more information is needed to deliver a rate cut.<\/p>\n \u201cHigher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen,\u201d Powell told reporters following the Fed meeting on Wednesday. \u201cA reasonable base case is that the effects on inflation could be short-lived\u2014reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.\u201d<\/p>\n Not only will inflation likely increase as it has already begun to do<\/a>, albeit modestly, Moses said, but companies will continue to confront the impact of tariffs. Apple<\/a> was the latest giant to feel the burn from tariffs, reporting on Friday strong earnings, but a $1.1 billion hit<\/a> from the levies. As companies continue to reckon with the impact of tariffs, they will likely choose to both eat margins and compromise growth, as well as raise prices on goods, according to Moses, with stagflation being the most probable outcome.<\/p>\n \u201cPick your poison,\u201d Moses said. \u201cIt\u2019s either going to hit corporate margins, and earnings will go down, which means the market\u2019s expensive, or it\u2019ll be passed on to the consumers and be inflationary. I think it\u2019s going to be a combination of both.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Following the latest round of tariffs, it\u2019s only a matter of time before the other economic shoe drops,…\n","protected":false},"author":3,"featured_media":112401,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,31647,266,2175,4053,67,132,68],"class_list":{"0":"post-112400","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-gdp","11":"tag-inflation","12":"tag-tariffs","13":"tag-tariffs-and-trade","14":"tag-united-states","15":"tag-unitedstates","16":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114958011253364561","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/112400","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=112400"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/112400\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/112401"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=112400"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=112400"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=112400"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}