The Trump 2.0 Era: Global Economic and Geopolitical Shifts

1. Tariff Wars: Trump's Core Ambition

One of Trump's signature policies is tariff wars. He has shown a willingness to use tariffs as a means to strengthen the US-centric structure in the trade market.
During Trump's presidency from 2017 to 2020, the uncertainty of trade policies was greatly heightened. There is a possibility that the confusion in trade policy will intensify further by 2025.
Tariff wars are likely to lead to a decrease in global trade volume, reduce the trade-to-GDP ratio, and pose a significant risk of pushing the global economy into a state of low growth.
Trump's true purpose for using tariffs is to relocate foreign companies to the United States. Accordingly, Korean companies such as Hyundai Steel, Samsung Electronics, and SK are moving to the US.

2. The Reality of Technology Transfer and Brain Drain

Major Korean companies are significantly expanding their investments in the United States under the pressure of the Trump era. This is a result of America First policies, and the outflow of Korean technology and talent is becoming inevitable.
Emigration to the US is also increasing at the individual and household levels, which is a factor that shrinks the assets and value of the Korean economy.

3. Cryptocurrency and Bitcoin Policy

One of the new pledges presented by Trump is to secure Bitcoin as a strategic reserve asset.
However, legal approval from Congress is needed to implement this. The passage in Congress and the Fed's policy led by Powell will be major variables.
If the policy is implemented, it is highly likely that it will have a positive impact on Bitcoin and the entire cryptocurrency market.

4. Shipbuilding and Military Cooperation

Trump is likely to actively seek to utilize South Korea's shipbuilding technology in the US defense industry.
In particular, cooperation with South Korea is likely to be strengthened in the Naval Vessel Maintenance, Repair, and Overhaul (MRO) market and LNG carrier and oil tanker-related cooperation.
This is a strategy to export more shale gas and shale oil, and to expand the shipbuilding capacity to transport them.

5. Military Tensions and Geopolitical Changes

Instead of Biden's value-based diplomacy, Trump will pursue strictly transaction-focused diplomacy and try to end the war in Ukraine by joining hands with Russia.
Interest in dominating the Arctic sea route is also one of Trump's strategic ambitions, revealing his intention to secure related resources and expand trade routes.
Geopolitical tensions with China are still an important issue, and major conflicts are expected over securing Taiwan's TSMC and military leadership.
In addition, like his remarks about merging with Canada, Trump will pursue the integration and resource acquisition of the entire North America with a business-like approach.

< Summary >

The major issues of the Trump 2.0 era are tariff wars, technology and talent outflows, turning cryptocurrencies into strategic assets, shipbuilding cooperation, and military and geopolitical tensions.
Significant changes that will have a considerable impact on global paradigms in economics, diplomacy, and military affairs are expected, which is likely to lead to geopolitical reorganization and changes in the industrial structure.

Crafted by Billy Yang
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US Economy and Liquidity: Past and Outlook

1. The Meaning of Liquidity and Asset Markets

Liquidity can be interpreted from various perspectives and has a significant impact on asset markets and economic outlook.
Generally, the central bank (Fed)'s quantitative easing (QE) or quantitative tightening (QT) policies, and increases or decreases in reserve requirements are key factors in liquidity changes.
In the past, from 2021 to 2024, fluctuations in the asset market can be explained through the Fed's balance sheet and reserve flows.
- 2022: The Fed's balance sheet increased, but the asset market declined due to decreased reserve balances.
- 2023-2024: Conversely, even though the Fed implemented QT, the decrease in reserve balances was small, and market liquidity was maintained at a high level, leading to a recovery in the asset market.

2. Policy Coordination Between the Fed and the Government

Monetary Policy (Fed): Curbing inflation through interest rate hikes and liquidity reduction.
Fiscal Policy (US Government): Stimulating the economy through treasury bond issuance and fiscal expansion.
Key Points:
- The Fed maintained a tight monetary policy by raising or freezing interest rates, but real liquidity continued to boost the economy due to the government's treasury bond issuance policy.
- The government is absorbing market funds by issuing treasury bonds at relatively high interest rates and investing in new growth engines such as AI and semiconductors.

3. 2025 US Economic Outlook

Liquidity Changes:
- The Fed's QT is likely to end, and the significance of liquidity management through the balance sheet will fade.
- New liquidity model: Bank credit lending is expected to be the main driver.
US Growth Rate:
- Many experts project an increase in US economic growth rates from 2024 to 2025.
- Competitiveness is being strengthened through expansionary fiscal policies and investments in advanced technologies such as AI and semiconductors.
Unique Goldilocks Scenario for the US:
- While the global economy is entering a low-growth phase, the US is likely to maintain or exceed its potential growth rate, indicating a ‘solo growth’ possibility.
- This is sustainable due to capital inflows and a strong dollar as funds from other countries flow into the US.

4. Debt and Interest Expense Issues

Nature of US Debt:
- More than 70% of US government debt is held by domestic investors, potentially contributing to a positive cycle of consumer spending and economic activity within the US.
- Unlike the debt crises of past hegemonic powers, the US debt issue is managed through a domestic circulation structure that reduces dependence on overseas funding.
Sustainability:
- High debt interest burdens can be a long-term problem, but high economic growth rates are likely to offset this.
- In the medium term, it is expected that the debt ratio will be adjusted by maintaining a nominal growth rate > average interest rate level.

5. Trump and 2025 Economic Policy Direction

Policy Stance:
- If the Trump administration is re-elected, it will promote corporate investment and productivity growth through tax cuts and deregulation.
- The goal is to increase GDP growth through nurturing promising future industries such as AI, semiconductors, and electric vehicles.
Interest Rate and Fiscal Policy:
- Initially, a stable strong dollar is expected through maintaining tight monetary policy.
- Once the manufacturing base is strengthened and the value chain is established, interest rate easing may be pursued.

6. Global Economic Impact

US Solo Growth vs. Global Low Growth:
- The concentration of capital in the US is expected to continue due to the strong dollar and rising US economic growth rates.
- This could lead to economic pressures for other countries due to debt and interest rates.
Strategic Investment within the US:
- Global companies in manufacturing and advanced technologies are increasingly dependent on production in the US.
- The strong dollar and high interest rates pose a burden for small and medium-sized enterprises and emerging economies.

< Summary >

In the past, from 2021 to 2024, liquidity policies played a decisive role in boosting asset markets and the economy through coordination between the Fed's monetary policy (interest rates and balance sheet management) and the government's fiscal policy (treasury bond issuance and investment).
In 2025, liquidity centered on the real economy, such as bank credit supply, is expected to play a major role rather than the Fed's balance sheet.
The US is likely to achieve solo growth through expansionary fiscal policies, nurturing AI/semiconductors, and economic stabilization.
A strategy is anticipated to solve long-term debt problems by increasing GDP growth.

Crafted by Billy Yang
[Related articles at Next-Korea.com]
- US Interest Rate Policy and Asset Market Outlook
- Global Economic Trends Led by AI and Semiconductors

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Trump's Second Presidential Term and Stock Market Reaction: Analysis of Expectations and Risks

Trump's Second Presidential Term: Key Points

100-Day Honeymoon Period: A roughly 100-day period immediately following the presidential inauguration, marked by a positive atmosphere from the media and markets, resulting in favorable conditions for the economy and stock market.
Focused Policy Announcements: Trump is expected to announce significant policies and legislation early in his term, creating both market anticipation and concerns.
Historical Data and Bull Market: Following the confirmation of Trump's re-election in 2024, the stock market saw a short-term surge of 4.7% and a recent 2.9% increase over the past week, attracting significant attention.

1. Honeymoon Opportunity vs. Pre-Reflected Risks

Long-Term Bullish Scenario

Trump's pro-market statements and willingness to ease US-China relations are highly likely to positively impact the stock market.
A strong stock market performance in January (positive returns) increases the statistical probability of a positive trend throughout the year.

Short-Term Risk: "Sell the News" Debate

As expectations are already factored into the stock market, a correction after actual policy announcements is possible.

2. Analysis of Trump's Policies That Will Significantly Impact the Market

Energy: Natural Gas and Small Modular Reactors (SMRs)
- Policy Direction: Deregulation and expansion of energy supply.
- Beneficiary Stocks: Shale gas, LNG-related stocks, and SMR companies.
- Past Examples: During Trump's first term, natural gas exports and production surged.
Finance: Deregulation
- Policy Direction: Encouraging mergers and acquisitions (M&A) and revitalizing the IPO market.
- Beneficiary Stocks: Major Wall Street banks such as Goldman Sachs and JPMorgan.
- Testimony: Related personnel expressed confidence in the stability of the financial market.
Tech: Big Tech-Centric Policy

Policy Direction: Pro-market deregulation, reduced antitrust investigations.
Beneficiary Stocks: Big tech companies like Meta, Apple, and Tesla.
Current Situation: The European Union is reconsidering Big Tech investigations, creating a market-friendly atmosphere.

Cryptocurrency: Potential for Active Support
- Expectations: The possibility of adopting cryptocurrency as a strategic asset.
- Bitcoin's Record High: Reflects anticipation.

3. Linkage with Global Markets

Easing US-China Relations: Expressed goodwill in a phone call with Xi Jinping prior to his inauguration, signaling a willingness to de-escalate tensions.
Reduced European Regulations: Easing measures related to Big Tech, expecting positive changes after Trump's inauguration.
Japanese Interest Rate Policy Variable: The Bank of Japan is also expected to make moves conscious of Trump's stance.

4. Market-Leading Stocks and Areas of Interest

Big Tech
- Tesla: Expected to benefit from deregulation in autonomous driving and the energy sector.
- Apple: Considered a buying opportunity at its current low point, despite short-term sluggishness.
- NVIDIA: Potential pressure due to the impact of US-China technology conflicts.
Finance and Energy
- Financial ETF (XLF): Composed of JPMorgan, Wells Fargo, and Goldman Sachs.
- Energy-related Stocks: Attention on natural gas export companies and SMR stocks.
Cryptocurrency

Major Assets: Bitcoin and related blockchain technology companies.

< Summary >

With Trump's second inauguration, a 100-day honeymoon effect is expected, and bullish factors (financial deregulation, pro-Big Tech policies, strengthening energy dominance) are being factored into the stock market.
The current market may be overheated in the short term with a "Sell the News" risk, but it is necessary to explore mid-to-long-term investment opportunities in the long run.

Crafted by Billy Yang
[Related Articles at Next-Korea.com]
1. "Analysis of the Impact of Trump's Economic Policies on the Market"
  
  https://Next-Korea.com?s=트럼프
2. "Pro-Market Policies and the Outlook for Big Tech Leading Stocks"
  
  https://Next-Korea.com?s=빅테크