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March 23, 2017 | Why Does Wall Street Not Fear ‘Mr. Smoot-Hawley’?

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

With all of the hubris over tax cuts and deregulation anticipated under Trump, his threatening stance on tariffs seems to be of little concern on Wall Street. It ought to be, however. Historians have come to accept more and more that the Smoot-Hawley tariff, enacted in the summer of 1930 after a knock-down, drag-out battle in Congress, played a key role in precipitating the 1929 Crash and the depression that followed. Some historians have gone as far as tracing the stock market’s ups and downs prior to the crash in relation to headlines about Smoot-Hawley’s progress on Capitol Hill. The results are eye-opening, suggesting as they do that Wall Street was obsessed with Smoot-Hawley. On days when approval of the legislation seem in doubt, stocks rallied; and when the law’s passage appeared more likely, they fell. So why are investors and traders seemingly oblivious to the trade-policy declarations of a president who personifies the spirit of Smoot-Hawley? It’s a good question — one for which I have no compelling answer. Could it possibly be because investors and traders circa 2017 are even more insane than their 1929 counterparts?

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March 23rd, 2017

Posted In: Rick's Picks

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