Byron Wien on Trump, Trade, Deficits and Thucydides

On June 27, 2018, I spoke with Byron Wien of the Blackstone Group, a longtime friend of Advisor Perspectives and the author of the widely-followed Ten Surprises series of predictions, which Byron has produced for 33 years. For many years, Byron was chief U.S. investment strategist at Morgan Stanley.

If you are in the camp of those who think Donald Trump is mostly a destructive force in the U.S. economy, how destructive will he be? Some investors, such as Seth Klarman, who have not historically been sympathetic to Democratic causes, are actively working to elect Democrats to weaken Trump’s power. How do you react to that strategy?

Well, I am in that camp, but people are not recognizing that the vast majority of the electorate is probably applauding what Trump is doing. Most people think our trading partners have taken advantage of us. Many people are benefiting from the tax cut and the deregulation that Trump was able to achieve. As a result of that, the Wall Street community may be somewhat skeptical of Trump, but I think he has more support than most people realize. As a result of that, all the polls show Democrats are going to take the house. I think that outcome is less certain.

The tax cut and deregulation, in my view, are generic Republican stuff that is not unique to Trump. A trade war and an immigration war are not generic Republican policies and they concern me.

I agree with that. But Trump’s method of operation is to take an extreme position and be willing to back down on it. The separation of children from their families is an example. That was a clear mistake. It was a humanitarian error and a political misjudgment and he reversed it. I think he lost some political capital in the process, but he did change his mind. He is perfectly willing to change his mind.

Trump appears to want domestic approval. He doesn’t care how many people abroad he offends. He is an example of inward thinking. Inward thinking is the most powerful political force operating in the world today. It is an aspect of populism. You first saw it with the Brexit decision, and you are seeing it around the world with the re-election of Erdogan in Turkey and his increase in power. In China, Xi Jinping is now president for life. The idea of countries cooperating with each other has diminished greatly over the past two years.