January 28, 2025 • 12 mins
Rabobank’s Singapore-based global strategist talks about Trump, trade and tariffs, and we ask if the talk around tariffs is just bluster. In part two of this interview, Every looks at the potential benefits of a Trump presidency and how the 2025 world economy could play out for a food-producing nation such as New Zealand.
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Episode Transcript
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Speaker 1 (00:00):
He's one of my favorite, if not my most favorite
guest here on the country. His name is Michael every
He's a Singapore based although he's in Thaireland today, global
strategist for Ravo Bank. Michael, I call you an alarmist.
I love your work, but are you alarmed at what's
happening out there at the moment or well, Donald Trump, that's.
Speaker 2 (00:19):
All what a fantastic question to start with, Jamie. I
think there's a lot to be concerned about. And this
is a point where we've gone beyond the what ifs
and the maybes and the speculation, and we have to
start really looking at the actuality of it. Because just
(00:42):
overnight again in our time zone, we've had Bessant, who
is going to be the new US Treasury Secretary, say
that he personally favors a universal US tariff going up
to as high as twenty percent, which would be an
absolute shock for the markets where it to happen, but
going up incrementally two point five percentage points every month
(01:02):
to give people time to adjust, and Trump himself saying well,
key sectors like farmer metals, semiconductors, those are going to
be tariffed now that may be compatible with what Bess said.
But in either case, we are looking at a very
very different structure to the US economy and therefore to
the global economy. And this really does appear to be
(01:24):
something they're serious about. They're not just talking about it.
And as you know, I've been saying the same thing
for years, and I think here we are finally So
as the.
Speaker 1 (01:33):
World becomes more nationalistic and protectionists, free tried effectively now
a thing of the past.
Speaker 2 (01:40):
Yes, And though there will still be lots of international trade,
there will still be lots of goods and services that
need to flow across borders. What will change dramatically if
America does what it says is going to do is
the overall architecture of the global economy. Because most people
don't understand that while country A trades with country B.
(02:03):
That's for example, New Zealand grows food and sells it
to a country in Asia. When you sell that food,
you sell it in US dollars, and you do that
because the entire global system is based on the fact
that America runs a big deficit with the rest of
the world, which is where those dollars come from. People
don't understand this It's very simple and very complex at
(02:24):
the same time. But the simple part is all the
dollars come from America because they end up buying more
than they sell, and that's the net inflow. They don't
want to do that anymore, in the same way that
New Zealand wouldn't want to and many other countries wouldn't
want to. But if they don't, that dollar flow will
dry up, and as a result, trade will have to
be reordered, restructured quite aggressively and very disruptively, or all
(02:48):
the way around the world. That will still mean international trade,
but it won't look the way that it used to.
Speaker 1 (02:53):
So you don't buy into the argument that part of
this tariff talk is just bluster.
Speaker 2 (02:59):
No, I think that people saying that a blustering because
they don't understand how the world's system really works, and
if they do, they're too afraid to confront it. It was,
as I said, it's all predicated on the permanent concept
that America will always run a trade deficit. Why should they?
Why should America always run a trade deficit with everybody else?
It's like, I mean, they get big benefits from it.
(03:21):
Don't get me wrong, there are upsides to it. But
it's like someone saying, right, you're going to get free
fast food every day for the rest of your life,
that you have to eat all of it. So I'm
going to give you like a super sized fast food
meal for breakfast and for lunch and for dinner, and
you never have to cook again, you never have to
go shopping again. But you've got to eat that every
day forever. On one hand, you can say yummy, yummy,
(03:41):
and just like keep you know, putting on larger and
larger stretch pants. And on the other you might thinking,
is this really good for me? Is this sacally what
I want in the long run? I mean, it's satisfying
in one respect, everyone's happy. It keeps the whole system going.
But really, I don't know if this is in my
long run health and whether you like it or not,
and many people don't. I get that Trump is turning
around and in his own way, trying to basically say
(04:03):
America is going to go on some form of diet
and start eating protein shakes instead of fast food, and
the entire system which is predicated on America only ever
just need a junk food forever, is wabbling.
Speaker 1 (04:14):
Well, Trump's gone off the junk food himself. He's on
a diet. He's lost twenty or thirty pounds, so I hear. Look.
Just a final question and part one of the two
part interview, Michael Every, look into your crystal ball. What
do you think How do the next four years play
out under Trump?
Speaker 2 (04:31):
Oh, it's going to be extremely volatile in terms of markets.
We've already seen that. And that's not just because of
his signature style. It's because the concept of what he's
trying to push through, as I said, is not understood
by enough people. But as they start to grasp what
actually is happening, and it starts to actually happen and
trade actually has to start shifting all around the world. Yeah,
(04:54):
there will be absolute panic. I mean, we've seen a
lot of that in markets already and we haven't seen
anything yet.
Speaker 1 (04:59):
Michael Free Out of Singapore, Singapore based global strategists for Rabobank.
We will take a break on the other side of it.
We'll look at some of the good things maybe that
could come out of a Trump presidency. Welcome back to
(05:21):
the country. Part to ever interview with Michael Every, Singapore
based global strategists for Rabobank. Okay, a Trump presidency. We've
got them for the next four years, Michael, could good
come out of a Trump presidency and I'm talking about
world peace? How much of the Gaza deal is due
to Trump or the threat of Trump? And can Trump
(05:41):
scare the Bejesus as I like saying out of Putin,
then maybe get a deal in Ukraine.
Speaker 2 (05:47):
Well, potentially, yes, to start with a Ukraine thing. Whether
or not that's the deal that Ukraine's completely happy with
and everyone's completely happy with is another question. But you know,
Trump already did make a difference in guys of Boo
because that deal was on the table for a very
long time. And to be blunt, and I'm trying not
to be party political here, but if you read the
local press from both sides, you will see that neither
(06:09):
side actually took Biden very seriously. They didn't believe it
when he waved a big stick because he very rarely
used it. Trump is taken seriously when he makes threats,
and so you know, he basically made it clear to
both sides, you are going to sign this deal, and
as a result, it was signed and it went through.
Now he can't use quite the same technique with Russia
because there are much bigger power than we're talking about
(06:30):
in them add least. But the same concept of actually
saying right, I'm taken seriously people are afraid of me
can actually make a big difference because being nice and
polite and reasonable and setting up working committees, et cetera,
et cetera. You know what, it doesn't get you very
far with tough guys. It's an unpleasant truth.
Speaker 1 (06:47):
Okay, Trump wants to drill, baby drill. If he extracts
more oil, more energy from US soil, can he drive
down the price of oil on a global scale, and
will that force putin's hand?
Speaker 2 (07:01):
Well, that's a good argument. I mean, that's also critical
to him bringing down inflation in the US too. If
you look at it purely from a market perspective like
supply and demand them where firms would like to invest, etc.
The argument is probably no, because you know you're going
to tell them to pump more oil when the price
goes down. Therefore they're going to make less money doing it.
But and this is an argument I've been making for
(07:22):
a while. If you look at the legislation the US
has on the books, and which I believe Trump is
already starting to use. He can basically declare a national
security emergency and force companies to do it because it's
good for the overall national security, it's good for the
overall national economy, at which point, you know, maybe they're
not making much money who meets barrel that they're pumping,
but everyone else benefits from it. If he's going to
(07:44):
go that route, and if he can get Saudi Arabia
to help him, and obviously there's a lot of charais
and sticks and will in cake cutting swords that need
to be used there, maybe just maybe he can do that,
and that could yes, that could help.
Speaker 1 (07:57):
Will the American economy and therefore ultimately the world's economy
potentially flourish under Trump.
Speaker 2 (08:05):
Well, look, that's the key question. This is such a
political issue that people who see the world one way
and those who don't like Trump will refuse to accept
that it's possible, and people who love Trump will say, well,
naturally there's going to be the case. Trying to be
purely objective, I would say that it could be a
complete car crash and everything could go completely wrong, or
it could be actually a really fantastic period of growth
(08:25):
for America at least and for others after a period
of adjustment, because, as I've spoken to you about many
times in the bar of Jamie, the entire global system,
just to repeat again, is predicated on America always spending
more than it earns, importing more than their exports, and
effectively eating junk food three meals a day. It doesn't
want to do that anymore, and the adjustment process for
(08:46):
that would force an adjustment process through everybody else. But
in the long run it would make everybody else healthier
as well. It would do the model of everyone being
more self reliant, making things more at home if they
can where it's sufficient to do so, looking at them
stick demand rather than worrying about what you can sell
to others first, so that you can have customers nearer
and and less strain geopolitically on your balance sheet, etc.
(09:10):
It's not a bad one. So if everyone can manage
to copy that to some degree after that adjustment, generally
we could be better off. That doesn't mean everyone would be,
because the countries who have been doing very well selling
that junk food would not be doing so well. So
I want to make it clear it's not a universal win.
Speaker 1 (09:26):
Well, twenty twenty five be a better year financially than
twenty twenty four. It would be difficult, especially here in
New Zealand, for it to be worse.
Speaker 2 (09:35):
Well, who for I mean if we look at the
year so far I'm talking to you right now, where
we've just seen the stock markets around the world collapse,
and you know, the tech bubble start to burst, potentially
because of a new cheapest chips Chinese AI. I think
it's not cheapest chips actually, and there are a lot
of questions about it, but that's a pretty bad start
for the year if you had all your savings in
(09:57):
the US stock market, or in the NASDA, or or
on the tech sector. So it really depends who you
are and how you've invested. But I do think there's
a possibility that we'll see lower interest rates going forward
over the year, which is a lot of relief for
a lot of people, and hopefully that can offset some
of the volatility we might see elsewhere.
Speaker 1 (10:15):
Michael Avery with us from Rabobank Global Strategists. Let's just
finish on our usual positive note. Michael, how does this
play out for New Zealand in terms of being a
food producer in twenty twenty five? And I also want
to ask you, we've been talking all about Trump and America,
what about our biggest trading partner, China.
Speaker 2 (10:36):
Well, okay, let's start with the New Zealand angle. Obviously,
you guys make chips that you eat rather than chips
that you put in computers, and right now, as of
today when we're speaking, that looks like the much better choice,
even if people wouldn't have said it over the past
twelve months. So let's wait and see. But you know,
what goes up can often come down, right and what
has gone down can come up. In terms of China,
(10:56):
they are very much one of the countries that would
potentially lose out back from what Trump is trying to achieve.
But from a KeyWe perspective, I don't think it actually
makes that much difference because the market that you've been
trying to set into this, you know, this consumer market
for food is already one that China has been making
very clear it wants to try and bring on shore
as much as possible. They're completely transparent and have been
(11:19):
for years about the fact that they want to import
as little as possible and over time to domesticate as
much of their agri supply chain as they can, So
there's no change on that front. But where for New
Zealand there may be opportunity is as the global order
shifts around, as trading blocks break up and form, as
lines on maps are redrawn, and that really is happening.
(11:39):
If New Zealand plays its political cards right, it could
end up in the winner's circle where you're together with
a group of countries who are all large net food
producers and that would give you the Whippan globally. But
if it plays its cards wrong and it tries to
go solo and things it can you know, play one
side off against the other. Yeah, things get could get
very very rocky. So New Zealand is going to have
(11:59):
to play a very very smart game going forward, as
were many others, you know, including Australia. I believe you
can do it, but it's certainly going to involve a
little bit more creative thinking than has been the case
of the past forty or the years.
Speaker 1 (12:10):
Well you've given me some hope, Michael, every global strategist
out of Singapore for Rabobank, always a pleasure to have
you on the show.
Speaker 2 (12:17):
Thank you very much.
He's one of my favorite, if not my most favorite
guest here on the country. His name is Michael every
He's a Singapore based although he's in Thaireland today, global
strategist for Ravo Bank. Michael, I call you an alarmist.
I love your work, but are you alarmed at what's
happening out there at the moment or well, Donald Trump, that's.
Speaker 2 (00:19):
All what a fantastic question to start with, Jamie. I
think there's a lot to be concerned about. And this
is a point where we've gone beyond the what ifs
and the maybes and the speculation, and we have to
start really looking at the actuality of it. Because just
(00:42):
overnight again in our time zone, we've had Bessant, who
is going to be the new US Treasury Secretary, say
that he personally favors a universal US tariff going up
to as high as twenty percent, which would be an
absolute shock for the markets where it to happen, but
going up incrementally two point five percentage points every month
(01:02):
to give people time to adjust, and Trump himself saying well,
key sectors like farmer metals, semiconductors, those are going to
be tariffed now that may be compatible with what Bess said.
But in either case, we are looking at a very
very different structure to the US economy and therefore to
the global economy. And this really does appear to be
(01:24):
something they're serious about. They're not just talking about it.
And as you know, I've been saying the same thing
for years, and I think here we are finally So
as the.
Speaker 1 (01:33):
World becomes more nationalistic and protectionists, free tried effectively now
a thing of the past.
Speaker 2 (01:40):
Yes, And though there will still be lots of international trade,
there will still be lots of goods and services that
need to flow across borders. What will change dramatically if
America does what it says is going to do is
the overall architecture of the global economy. Because most people
don't understand that while country A trades with country B.
(02:03):
That's for example, New Zealand grows food and sells it
to a country in Asia. When you sell that food,
you sell it in US dollars, and you do that
because the entire global system is based on the fact
that America runs a big deficit with the rest of
the world, which is where those dollars come from. People
don't understand this It's very simple and very complex at
(02:24):
the same time. But the simple part is all the
dollars come from America because they end up buying more
than they sell, and that's the net inflow. They don't
want to do that anymore, in the same way that
New Zealand wouldn't want to and many other countries wouldn't
want to. But if they don't, that dollar flow will
dry up, and as a result, trade will have to
be reordered, restructured quite aggressively and very disruptively, or all
(02:48):
the way around the world. That will still mean international trade,
but it won't look the way that it used to.
Speaker 1 (02:53):
So you don't buy into the argument that part of
this tariff talk is just bluster.
Speaker 2 (02:59):
No, I think that people saying that a blustering because
they don't understand how the world's system really works, and
if they do, they're too afraid to confront it. It was,
as I said, it's all predicated on the permanent concept
that America will always run a trade deficit. Why should they?
Why should America always run a trade deficit with everybody else?
It's like, I mean, they get big benefits from it.
(03:21):
Don't get me wrong, there are upsides to it. But
it's like someone saying, right, you're going to get free
fast food every day for the rest of your life,
that you have to eat all of it. So I'm
going to give you like a super sized fast food
meal for breakfast and for lunch and for dinner, and
you never have to cook again, you never have to
go shopping again. But you've got to eat that every
day forever. On one hand, you can say yummy, yummy,
(03:41):
and just like keep you know, putting on larger and
larger stretch pants. And on the other you might thinking,
is this really good for me? Is this sacally what
I want in the long run? I mean, it's satisfying
in one respect, everyone's happy. It keeps the whole system going.
But really, I don't know if this is in my
long run health and whether you like it or not,
and many people don't. I get that Trump is turning
around and in his own way, trying to basically say
(04:03):
America is going to go on some form of diet
and start eating protein shakes instead of fast food, and
the entire system which is predicated on America only ever
just need a junk food forever, is wabbling.
Speaker 1 (04:14):
Well, Trump's gone off the junk food himself. He's on
a diet. He's lost twenty or thirty pounds, so I hear. Look.
Just a final question and part one of the two
part interview, Michael Every, look into your crystal ball. What
do you think How do the next four years play
out under Trump?
Speaker 2 (04:31):
Oh, it's going to be extremely volatile in terms of markets.
We've already seen that. And that's not just because of
his signature style. It's because the concept of what he's
trying to push through, as I said, is not understood
by enough people. But as they start to grasp what
actually is happening, and it starts to actually happen and
trade actually has to start shifting all around the world. Yeah,
(04:54):
there will be absolute panic. I mean, we've seen a
lot of that in markets already and we haven't seen
anything yet.
Speaker 1 (04:59):
Michael Free Out of Singapore, Singapore based global strategists for Rabobank.
We will take a break on the other side of it.
We'll look at some of the good things maybe that
could come out of a Trump presidency. Welcome back to
(05:21):
the country. Part to ever interview with Michael Every, Singapore
based global strategists for Rabobank. Okay, a Trump presidency. We've
got them for the next four years, Michael, could good
come out of a Trump presidency and I'm talking about
world peace? How much of the Gaza deal is due
to Trump or the threat of Trump? And can Trump
(05:41):
scare the Bejesus as I like saying out of Putin,
then maybe get a deal in Ukraine.
Speaker 2 (05:47):
Well, potentially, yes, to start with a Ukraine thing. Whether
or not that's the deal that Ukraine's completely happy with
and everyone's completely happy with is another question. But you know,
Trump already did make a difference in guys of Boo
because that deal was on the table for a very
long time. And to be blunt, and I'm trying not
to be party political here, but if you read the
local press from both sides, you will see that neither
(06:09):
side actually took Biden very seriously. They didn't believe it
when he waved a big stick because he very rarely
used it. Trump is taken seriously when he makes threats,
and so you know, he basically made it clear to
both sides, you are going to sign this deal, and
as a result, it was signed and it went through.
Now he can't use quite the same technique with Russia
because there are much bigger power than we're talking about
(06:30):
in them add least. But the same concept of actually
saying right, I'm taken seriously people are afraid of me
can actually make a big difference because being nice and
polite and reasonable and setting up working committees, et cetera,
et cetera. You know what, it doesn't get you very
far with tough guys. It's an unpleasant truth.
Speaker 1 (06:47):
Okay, Trump wants to drill, baby drill. If he extracts
more oil, more energy from US soil, can he drive
down the price of oil on a global scale, and
will that force putin's hand?
Speaker 2 (07:01):
Well, that's a good argument. I mean, that's also critical
to him bringing down inflation in the US too. If
you look at it purely from a market perspective like
supply and demand them where firms would like to invest, etc.
The argument is probably no, because you know you're going
to tell them to pump more oil when the price
goes down. Therefore they're going to make less money doing it.
But and this is an argument I've been making for
(07:22):
a while. If you look at the legislation the US
has on the books, and which I believe Trump is
already starting to use. He can basically declare a national
security emergency and force companies to do it because it's
good for the overall national security, it's good for the
overall national economy, at which point, you know, maybe they're
not making much money who meets barrel that they're pumping,
but everyone else benefits from it. If he's going to
(07:44):
go that route, and if he can get Saudi Arabia
to help him, and obviously there's a lot of charais
and sticks and will in cake cutting swords that need
to be used there, maybe just maybe he can do that,
and that could yes, that could help.
Speaker 1 (07:57):
Will the American economy and therefore ultimately the world's economy
potentially flourish under Trump.
Speaker 2 (08:05):
Well, look, that's the key question. This is such a
political issue that people who see the world one way
and those who don't like Trump will refuse to accept
that it's possible, and people who love Trump will say, well,
naturally there's going to be the case. Trying to be
purely objective, I would say that it could be a
complete car crash and everything could go completely wrong, or
it could be actually a really fantastic period of growth
(08:25):
for America at least and for others after a period
of adjustment, because, as I've spoken to you about many
times in the bar of Jamie, the entire global system,
just to repeat again, is predicated on America always spending
more than it earns, importing more than their exports, and
effectively eating junk food three meals a day. It doesn't
want to do that anymore, and the adjustment process for
(08:46):
that would force an adjustment process through everybody else. But
in the long run it would make everybody else healthier
as well. It would do the model of everyone being
more self reliant, making things more at home if they
can where it's sufficient to do so, looking at them
stick demand rather than worrying about what you can sell
to others first, so that you can have customers nearer
and and less strain geopolitically on your balance sheet, etc.
(09:10):
It's not a bad one. So if everyone can manage
to copy that to some degree after that adjustment, generally
we could be better off. That doesn't mean everyone would be,
because the countries who have been doing very well selling
that junk food would not be doing so well. So
I want to make it clear it's not a universal win.
Speaker 1 (09:26):
Well, twenty twenty five be a better year financially than
twenty twenty four. It would be difficult, especially here in
New Zealand, for it to be worse.
Speaker 2 (09:35):
Well, who for I mean if we look at the
year so far I'm talking to you right now, where
we've just seen the stock markets around the world collapse,
and you know, the tech bubble start to burst, potentially
because of a new cheapest chips Chinese AI. I think
it's not cheapest chips actually, and there are a lot
of questions about it, but that's a pretty bad start
for the year if you had all your savings in
(09:57):
the US stock market, or in the NASDA, or or
on the tech sector. So it really depends who you
are and how you've invested. But I do think there's
a possibility that we'll see lower interest rates going forward
over the year, which is a lot of relief for
a lot of people, and hopefully that can offset some
of the volatility we might see elsewhere.
Speaker 1 (10:15):
Michael Avery with us from Rabobank Global Strategists. Let's just
finish on our usual positive note. Michael, how does this
play out for New Zealand in terms of being a
food producer in twenty twenty five? And I also want
to ask you, we've been talking all about Trump and America,
what about our biggest trading partner, China.
Speaker 2 (10:36):
Well, okay, let's start with the New Zealand angle. Obviously,
you guys make chips that you eat rather than chips
that you put in computers, and right now, as of
today when we're speaking, that looks like the much better choice,
even if people wouldn't have said it over the past
twelve months. So let's wait and see. But you know,
what goes up can often come down, right and what
has gone down can come up. In terms of China,
(10:56):
they are very much one of the countries that would
potentially lose out back from what Trump is trying to achieve.
But from a KeyWe perspective, I don't think it actually
makes that much difference because the market that you've been
trying to set into this, you know, this consumer market
for food is already one that China has been making
very clear it wants to try and bring on shore
as much as possible. They're completely transparent and have been
(11:19):
for years about the fact that they want to import
as little as possible and over time to domesticate as
much of their agri supply chain as they can, So
there's no change on that front. But where for New
Zealand there may be opportunity is as the global order
shifts around, as trading blocks break up and form, as
lines on maps are redrawn, and that really is happening.
(11:39):
If New Zealand plays its political cards right, it could
end up in the winner's circle where you're together with
a group of countries who are all large net food
producers and that would give you the Whippan globally. But
if it plays its cards wrong and it tries to
go solo and things it can you know, play one
side off against the other. Yeah, things get could get
very very rocky. So New Zealand is going to have
(11:59):
to play a very very smart game going forward, as
were many others, you know, including Australia. I believe you
can do it, but it's certainly going to involve a
little bit more creative thinking than has been the case
of the past forty or the years.
Speaker 1 (12:10):
Well you've given me some hope, Michael, every global strategist
out of Singapore for Rabobank, always a pleasure to have
you on the show.
Speaker 2 (12:17):
Thank you very much.
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