The biggest issue today from a corporate and political perspective outside of conflict are the words disruption and tariffs. News paper headlines talking about the constant disruption in what is the new way of the world yet I find it all slanted and full of self interest but then again most things are.

 

Firstly, when you talk about disruption it is not as if as an analogy a volcano has gone off and the world has to deal with the carnage and aftermath. This is controlled disruption, this is specifically targeted disruption, this is disruption created for disruptions sake. It is a man made disruption or disaster, it is not a natural consequence of a free market or even free world.

 

The tariffs imposed by the US were possibly one of the biggest upheavals and impacts that the world has seen for a long time. They were delivered in a manner stating full justification but the reality being that as with most things were given out of self interest and self protectionism. Let me explain.

 

The US has a GDP that swamps the rest of the world, $30 trillion compared with second place China at $15 trillion, Japan at $5 trillion and down and down. Yet the US claims to be the victim of being stripped and pillared by all other nations but that is impossible due to its huge GDP over everyone else. How it chooses to manage that is up to the US but you can think of a countries GDP as a companies market capitalisation and as such the US have very little complaints. What is clear here is the direction from which president Trump is coming from as in the manufacturing and building sectors which is his background as apposed to the technical and scientific areas. There is no surprise of his attack on the elite colleges that also represent that. During his speech to deliver the tariffs he brought on stage a car factory worker as someone he was using as an example and who he is looking to protect and nurture by the very tariffs he is imposing. If you look at this from a wider perspective it potentially for business is the very opposite of what you believe the US has represented as in the home of the free world and free market. There are actually serious consequences to what can be considered preventing globalisation in the name or self protection. In explaining here you can use both the IT industry and the car industry as great examples to demonstrate this.

 

Firstly the IT industry, from Microsoft, Apple, Google, Intel, Nvidia and the rest the US have a virtually monopoly on the whole industry outside of a few other players. Possibly 80-90% of the global market. The rest of the world has to deal with that. The rest of the world has to take that on the chin. It has not imposed any tariffs on the US to prevent the sales.

 

Now let’s look at the car industry. In the US where you have car manufacturers that have failed badly to design, innovate, change and stay up to date with customers expectations. They have GM ford, Buicks and many gas guzzling trucks but outside of that I cannot personally recall any US car manufacturers regrettably of note. If there are another few it does not really change the argument. Compare that against the likes of Toyota, Renault, Audi, Mercedes, BMW, Land Rover and Range Rover, Porsche, Austin Martin, Ferrari, Lamborghini, Bentley, Rolls Royce and many other names yo could mention also. Everyone of those companies have continued to change, design, innovate and meet what they believe are customers expectations and car performance. That they have done with success and deserve that success. They have worked for that success. 

 

What the US are stating is that they want to change the free market, Change globalisation that is fair for all and dictate that they will protect an industry in the US that has failed to build the range, design and type that many of its citizens would like to drive and protect companies that have performed so badly for decades. If the US car industry cannot compete even closely with non-US brands due to its poor management and direction does the US government have the right to globally dictate they do? Even bigger do they have the right to state if you bring your factories to the US to build the very cars that our citizens want you will avoid the tariffs? That is about as far away from a fair market and globalisation as you can get and if that is what the disruptive new world order is about then I believe that the ramifications from that will be so much wider than those making the decisions will foresee. 

 

I read that China now has around a third of the worlds manufacturing flowing though it. That is for a reason. They have provided the costs, the workforce and the stability to ensure that can happen that no one else close can provide. That has resulted in apple being able to reach the heights they have and charge what they do for the phone. It was not that long ago when global markets depended on China that coined the phrase when China sneezed the west caught a cold. Yet due to china expanding and providing what they have they have now become a target simply due to success.

 

When you look at both the Chinese manufacturing to European car sector they both represent the same thing. Do you allow globalisation to exist, a free market, where companies able to provide what customers want or under the name of disruption do you break it all, destroy globalisation under there name of what can only be self interest politics to try and secure industries and companies that have to a degree dug the very holes they find themselves in. 

 

There is no supply chain crisis or disruption here this is not a carefully planned political agenda that its ramifications have yet to play out but is as most things is about self interest and self protection. If the USA ended up having to charge $3000 per iPhone and most citizens only having the choice of US car manufacturers would that be considered a success. Does anyone even understand what a successful outcome is here I think not.

 

That said this is also a huge tax raising scheme. Do not forget that all tariffs will be paid most likely by the consumer which means that all goods with tariffs on them coming into the US will be paid for by the American citizen as most corporations will not take the hit. So the agenda to prevent natural market forces and globalisation by setting these tariffs will only end up costing the US citizen more but a huge tax revenue scheme for the US government at what again will ultimately be the US tax payer. 

 

Christian John is about business for business sake and in regard to all the stated ensuring that what investment, sector, financial or instrument is the choice it remains as far away from the control of the above as is possible. The fact it understands the above and its dynamics and place is the important aspect here and what this presentation is looking to demonstrate. It will never allow itself to be both dictated to or at the mercy of what can be seen as the global political disruptive juggernaut that seems to be without a driver at the wheel right now.

 

This is not an anti-American statement whatsoever. This is about the hottest topic in the news. politically and the potential business impact in its ramifications and one that has to be talked about that is about more than just siding with the political consensus and stating what needs to be stated outside of flags and anthems.

 

As usual, as always, a Christian-John overview and understanding like very few others.

As always a name to trust in a complicated world without bias, without an agenda, simply seeing and stating the play.

It is that unique perspective that will be Christian-John private equity.