Market Observations

The Right Stuff?

Market Observations White Paper
October 2019

Authors & Contributors

Chief Economist Vincent Reinhart considers the downstream effects of US-China trade policy on the global economy and central banks.

The 1983 movie The Right Stuff interwove the story of the Mercury 7 astronauts with highlights of Chuck Yeager’s career as a test pilot. The latter provides the dramatic depth and an apt metaphor for the economic policy of President Trump. (This, perhaps, may be the only time the President is put on par with the Air Force general). Midway through the movie, Yeager pushes his plane past Mach 2 for a new speed record and temporarily blacks out. The plane spins out of control and tumbles to earth as Yeager breaks the canopy with his helmet. With the ground close in sight, he regains consciousness, steadies the ship, and pulls out of the dive with seconds to spare.

President Trump has similarly managed to put an expensive piece of machinery in a corkscrew crash dive. It is called the global economy, which is being buffeted by his moves to restrict international trade and threats of more to come. Central to our economic forecast and assessment of financial valuations is the assumption that he is willing and able to pull up in time to avoid a flaming wreck by cooling his trade war jets.