Trade Tensions Ratcheting UpÂ
Every hopeful trade talk sends investors delirious. Every let down drives stocks through the floor. The dips keep coming and they don’t stop coming, so should we be buying them? It’s complicated!
When the mass media compounds the mass hysteria by reporting the Dow Jones’ 300-point plummet, be sure to convert that into percentage terms before selling all of your stocks. Three hundred points is equal to just over 1%. However, it’s fair to say that the numbers don’t always tell the full story.
Yesterday, trade tensions came to a head. Talks were rumored to have broken down again after shares in Ambarella, a Chinese AI firm, lost 13% as President Trump blacklisted it along with 27 other companies. Ouch! A few barbs were thrown each way before the US confiscated several visas and accused China of multiple waves of abuse against its citizens. The art of diplomacy, eh? All this and more has scuppered any chance of a trade truce!
In the market’s view, both countries are strength-testing our global economy. The economy today is like a teetering bridge bearing heavier and heavier containers full of tariffed goods. Many alarming cord snaps and shrieks last week sent investors on a selling spree, with low US factory activity and services growth trickling in. But in a week’s time, the load will get even heavier.
The White House will raise tariffs from 25% to 30% on $250 billion of Chinese goods. Those are dizzy heights! The confident American consumer faces a tough task to keep the economy supported. When she goes, she goes!
