Tweet
I don't think we should take much from the market's decline in response to the addition of this 10% in additional tariffs that Trump tweeted about. The thinking of market watchers is this signals that trade negotiations aren't going as well as some may have thought. IMO, this is a negotiating tactic on Trump's part and it consistent with the strategy of placing increasing pressure on China.
TBH, the more I read about the nuts and bolts of what is underlying the trade dispute and what the interests of the two countries involved are, the clearer and more informed picture I get of the whole thing. There are legitimate issues and attendant complaints regarding trade on both sides. Those are the misunderstood and poorly explained items in all of this. What we get is sound bites that, depending on where we stand on the US-China trade dispute, either resonate or don't with us. When opponents of the Trump administration's China trade policy here that it is in "disarray" or that US negotiators are "fools," of course that resonates with them and like clock-work, they knowingly nod their heads in agreement with that take. The reverse is also true.
Although I put stock in how markets react to ongoing events in the world, in this case, I think it is a poor refection of what is going on with US-China trade because of what I just mentioned above. Market watchers who influence investors are susceptible to the same kind of uninformed logic driving their sell or buy advice as the rest of us. For example, we really don't know which part of the Chinese economy the Trump tweet indicated would be affected by this 10% tariff. If the tariffs are on apparel exported from China and consumed in the US market, they are meaningless and will have no impact whatsoever on China because apparel exports are but a fraction of the dollar value of all exports. OTH, if those tariffs are on auto parts, steel or electronics or any of the sectors of the Chinese economy that hold a larger share of the value of the overall exports, they would be painful.
My guess is that the Trump administration is applying this additional 10% tariff on goods that will have a minimal affect on China. They are widow dressing. The Chinese know it and if they choose to, they can impose tariffs on US exports to China that will also have a minimal effect. A tit-for-tat in kind sort of meaningless and mostly symbolic shots across the bow.
Still, despite that likely scenario, the markets reverse from 200 points up to 200 points down. A 400 point swing that is based on nothing factual but rather completely sentimental. I recognize that there are critics of the Trump administration's China trade policy and some of those criticisms are valid. But discussions about the propriety of any approach has to be an informed one and for the most part what we are fed that shapes our opinions should be looked at with a jaundiced eye.
TBH, the more I read about the nuts and bolts of what is underlying the trade dispute and what the interests of the two countries involved are, the clearer and more informed picture I get of the whole thing. There are legitimate issues and attendant complaints regarding trade on both sides. Those are the misunderstood and poorly explained items in all of this. What we get is sound bites that, depending on where we stand on the US-China trade dispute, either resonate or don't with us. When opponents of the Trump administration's China trade policy here that it is in "disarray" or that US negotiators are "fools," of course that resonates with them and like clock-work, they knowingly nod their heads in agreement with that take. The reverse is also true.
Although I put stock in how markets react to ongoing events in the world, in this case, I think it is a poor refection of what is going on with US-China trade because of what I just mentioned above. Market watchers who influence investors are susceptible to the same kind of uninformed logic driving their sell or buy advice as the rest of us. For example, we really don't know which part of the Chinese economy the Trump tweet indicated would be affected by this 10% tariff. If the tariffs are on apparel exported from China and consumed in the US market, they are meaningless and will have no impact whatsoever on China because apparel exports are but a fraction of the dollar value of all exports. OTH, if those tariffs are on auto parts, steel or electronics or any of the sectors of the Chinese economy that hold a larger share of the value of the overall exports, they would be painful.
My guess is that the Trump administration is applying this additional 10% tariff on goods that will have a minimal affect on China. They are widow dressing. The Chinese know it and if they choose to, they can impose tariffs on US exports to China that will also have a minimal effect. A tit-for-tat in kind sort of meaningless and mostly symbolic shots across the bow.
Still, despite that likely scenario, the markets reverse from 200 points up to 200 points down. A 400 point swing that is based on nothing factual but rather completely sentimental. I recognize that there are critics of the Trump administration's China trade policy and some of those criticisms are valid. But discussions about the propriety of any approach has to be an informed one and for the most part what we are fed that shapes our opinions should be looked at with a jaundiced eye.
Comment