Sam Dickie: Fisher Funds expert on the future of Trump's tariffs - and what it could mean for the economy

With China and the US promising trade war escalations, economists are speculating about the future of the tariffs and how they'll impact global economies.

Some have have drawn parallels with the Great Depression - and warned the world should be prepared for a downturn. 

Fisher Funds expert Sam Dickie explains further.

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Episode Transcript

Speaker 1 (00:00):
Heller duper see Allen Sam Dicky from Fisher Funds is
with us O Sam.

Speaker 2 (00:04):
Good evening here the.

Speaker 1 (00:05):
Righting now, Oh thank you so much. Geez, I've come
back straight into the old trade war and what's going
on with the tariff headlines? How long is this going
to go on for?

Speaker 3 (00:13):
Do you think?

Speaker 2 (00:15):
Well? There are sort of really three types of beer markets.

Speaker 3 (00:18):
And remember a beer market is one where the market
falls by twenty percent of more.

Speaker 2 (00:22):
And we were there last Tuesday. So three types.

Speaker 3 (00:25):
An event driven beer market, a cyclical beer market, and
a structural beer market.

Speaker 2 (00:29):
So structural is where there.

Speaker 3 (00:31):
Are structural imbalances or financial bubbles like the nineteen thirties
Great depression. Cyclical beer market is a function of the
economic cycle turning down like the nineteen ninety recession. And
an event driven beer market it's the most benign of all.
The market falls because of a specific event like COVID.
And to be clear, this current situation is event driven,

(00:51):
which is the most benign, and the event was the
Liberation Day tariffs. Now that's not to say that everything
that comes out of Trump's mouth as a virus like COVID.
But Goldman sacks that an exercise looking back almost two
hundred years, and event driven beer markets last only six
to eight months.

Speaker 1 (01:09):
Is there a possibility that an event driven beer market
becomes a structural beer market.

Speaker 3 (01:15):
Well, there's a possibility it can become a cyclical beer market.
So you think about you know, if you're sitting in
a boardroom in Hanoi or Mumbai, or Manchester or Milwaukee,
and you've been asked to sign off on a billion
dollar CAPEX project, for example, you'd probably sit on your hands, right,
And if consumers in businesses sit on their hands for

(01:37):
too long, we slip into recession and the beer market
could last for longer. And a cyclical beer market can
last obviously longer than six to eight months.

Speaker 1 (01:45):
Yeah, and then obviously the worst case scenarios, it then
becomes a structural one. And so, but the best case scenario,
what you're telling us is that we're talking about a
matter of months here.

Speaker 2 (01:53):
Yeah, that's right.

Speaker 1 (01:56):
Okay, are there any parallels in history here?

Speaker 3 (02:00):
Yeah, I think COVID is a reasonable parallel for event
driven beer market.

Speaker 2 (02:07):
Yeah, I mean those are other parallels. I've been looking
back two hundred years.

Speaker 3 (02:10):
There's been many event driven beer markets, and the average
time these last is six to eight months. The average
time of cyclical beer market lasts about twenty seven months,
so that's sort of gold Sex looking back over two
hundred odd years.

Speaker 1 (02:26):
So what are you looking for to kind of tell you,
to inform you as to where we're going with this
and whether it's improving or getting worse.

Speaker 3 (02:34):
I'd love to say we're able to ignore the haphazard
headline bombs coming out of the US, but really looking
for any signs of walking back some of the tariffs
and posts on China, any signs that the ninety day
pause on the rest of the world will result in
a permanent pause, but more so, any signs that there
is movement towards his endgame of on shore and US manufacturing.

(02:55):
So you probably saw in video in the press yesterday
talking up spinning half a true dollars over the next
four years to manufacture AI chips in the US. But Apple, Honda, Hyundai,
Volkswagen all making noises about ramping up US manufacturing and
then just the US dollar itself. Think of that as
a popularity barometer for Trump and the US is an
investment destination.

Speaker 4 (03:17):
Do you when you see these I mean a lot
of US are looking at some of the stuff that
he's backtracking on and he's sort of flip flopping, and
we're seeing it as signs that he's coming under pressure
and blinking, and we're taking that as positive signs. Are you.

Speaker 2 (03:29):
Yeah?

Speaker 3 (03:29):
I think that's reasonable. We did discover as his pain
threshold last Wednesday. And the market always talks about finding
the pain point tour looking for the where's the insurance
policy at?

Speaker 2 (03:40):
And originally the most benign.

Speaker 3 (03:43):
View was he won't want to see the equity market
falling because that's a you know, it's a popularity barometer.
But he was clearly prepared to let the equity market fall.
But when thirty year bond yields spike higher as foreign
investors put a higher risk premium on US government debt
and remember ninety percent of mortgages than the we have
to set off those rates. And then credit spreads spiked higher,

(04:04):
So credit spreads you slap on top of government bonds
to lend to you know, individuals or governments, individuals or businesses.

Speaker 2 (04:13):
That was his pain point.

Speaker 3 (04:14):
So equity market weakness hurts Wall Street at a rise,
and borrowing costs hurts everyone.

Speaker 1 (04:20):
Right, Sam, what's your advice to investors, Well.

Speaker 3 (04:23):
I can't give advice but that the market is watching
those three assets, the US dollars, the year bond, and
US credit spreads. They're all at slightly uncomfortable levels but
holding there for now. But more broadly, we've got to
remember at times like this, as equity investors, you learn
to stomach the sort of volatility every few years. So
two thousand and one and eight, twenty eleven, twenty eighteen,

(04:44):
twenty twenty, twenty twenty two, and now twenty twenty five
we saw these types of volatility as to be expected.

Speaker 2 (04:51):
The situation is fluid, but at the very least hither.

Speaker 3 (04:54):
I think it's a good chance to speak to your
financial advisor and check and make sure you're in the
right strategy for your risk tolerance.

Speaker 1 (05:00):
Ad Hey, thank you very much, Sam, appreciated. Happy Easter
to you that Sam ta Ki Fisher.

Speaker 2 (05:03):
Funds For more from hither Duplessy Allen Drive. Listen live
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Speaker 3 (05:08):
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