WASHINGTON. In our heads, we’re hearing our favorite old song again. When it comes to post-November 2016 see-saw stock markets, “What a Difference a Day Makes” seems to be Wall Street’s official song. Wednesday, traders in this summer’s see-saw stock markets seemed terrified by the latest tariff terrors President Trump dangled before a recalcitrant and unapologetic Chinese government. Stocks, including tech, sold off promptly and horribly as a result of the administration’s threats.
See-saw stock markets don’t care about investors. Only traders
But Thursday, stocks snapped back, shooting averages back up sharply. Perhaps, like some hapless little kid stuck on a see-saw when his buddy decides to jump off, stocks will slam downward again tomorrow to end this crazy post-holiday week. Who knows? We don’t. For active stock and options traders, though, this kind of bipolar nonsense is, like, the best summer ever. After all, our current see-saw stock markets are clearly for nimble traders, not plodding investors. (All the worse for us!)
Today, major corporate stocks comprising the widely-followed Dow Jones Industrial Average (DJIA) blasted skyward. Closing at 24,924.89, the Dow essentially erased Wednesday’s clobbering.
The broader-based S&P 500 rallied nearly one percent, closing at 2,798,29. Meanwhile, the tech-heavy NASDAQ also put the pedal to the metal. That average jumped up an impressive 1.4 percent, its best gain since the first day of June. The quick recovery in the Nazz was largely due to positive action in widely-followed Amazon (trading symbol: AMZN) and Facebook (FB). Both hit all time highs. Further evidence that our pathologically see-saw stock markets are still in control of the action. Not us.
Tech stocks, in fact, were also a significant part of the Dow’s Thursday rally. Two of that average’s tech components – Cisco (CSCO) and Intel (INTC) – were the DJIA’s top performers today.
More Trump “tariff terrors”?
Wednesday’s selloff keyed on Trump’s threat to whack another $200B worth of Chinese goods with a new 10 percent tariff.
The Chinese government claims not to want a trade war, though a spokesman also claimed they don’t fear one. The problem is that China launched a trade war against America some 18 years ago. This becomes particularly obvious in the area of tech. The current Chi-com government includes tech dominance as the major push in its plan to achieve economic superpower status. So what else is new? And who’s really causing the market’s bout of trade war tariff terrors?
Apple and the Feds nab a Chinese industrial/tech spy
Speaking of tariff terrors — as if to emphasize the Trump administration’s desire to counter the Chinese tech threat – which, historically, has included blatant theft of key U.S. technologies without compensation – the Wall Street Journal reported Wednesday (behind the paper’s pay wall) that a now-former Apple (AAPL) tech worker illegally downloaded proprietary software research and at least one box of high tech hardware.
This would-be spy allegedly swiped secret material from Apple’s double-secret autonomous vehicle research project, which is actually still alive in Cupertino. The alleged miscreant (read “Chinese industrial spy”) was all set to board a China-bound plane to take a new job with a Chinese tech company. Presumably, those purloined goodies from Apple boosted his chances for highly-paid domestic employment in the People’s Paradise.
The whole thing looked and sounded suspicious. And it sure did to always highly-paranoid Apple, Inc.
While specific details on this incident are scarce, we think it likely that Apple alerted the Feds to what they already knew about their soon-to-be-ex-employee. At any rate, the Feds nabbed this allegedly smooth operator before he boarded his China-bound flight.
A long history of Chinese industrial espionage and theft
The Chi-coms have pulled this kind of stuff ever since the Clinton administration. Bill and the boyz seemed at times to make things suspiciously easy for Chinese tech thieves in the late 1990s. (Maybe for a little baksheesh on the side? The Clintons ceaselessly troll for money, and no one possessing the details of their endless quest seems to remain alive for very long.)
At any rate, Trump is onto China’s massive and ongoing tech theft regime – something his predecessors seemed to care little about. But hey, tech creates America’s competitive crown jewels, right? And that’s primarily what all the tariffs and the alleged Trump trade war invole. For some reason, Trump wants to protect America’s competitive edge. And along with it, thousands of very high paying American jobs.
Turning the table and Making America Great Again
It’s high time China paid for the valuable tech stuff it routinely steals from us. Trump is forcefully trying to bring them around via his incremental tariffs, the latest of which may take effect in late August. Tariffs are a blunt instrument in international trade circles, to be sure. Success may not always result. But what should the U.S. do about China’s grand theft of our country’s technology future, other than allowing itself to be stolen blind?
We’re not sure Trump’s tariff tactics will either win this battle or even out the playing field somewhat. But what else must the U.S. government do to protect its key trade secrets from a rogue bunch of outright thieves supported by their government? Isolate or impeach Trump, the only recent president to fight back on this crucial issue?
Time to lay off of President Trump
In our book, this is why attacking Trump for his alleged policy of tariff terrors is a logical non-starter, at least for anyone wanting the U.S. economy to remain competitive. In this country, the battle lines are drawn. The globalists and the statists – aka, the “Deep State” – hate what Trump is doing. And they’re likely behind at least some of this week’s wild selling spree. On the other hand, working class “Deplorables” — the backbone of this country — are nearly all behind their President on this one. In our book, the Deplorables get it. The Deep State elitists do not.
America’s long-suffering workers understand better than most that the U.S. may need to sustain some short-term pain in order to come out even a little victorious in this China-initiated trade war. If we don’t defend our stuff, who will? Ask your #NeverTrump #Resistance senator or representative that question the next time he/she/or it is back in town trolling for your vote. They’ll all change the subject, or swivel the blame back on Trump. Guaranteed. It’s who they are, and it’s what they do.
In the meantime, our see-saw stock markets are likely to persist. So as investors, we all need to keep our seatbelts buckled for the rough ride ahead.
And yes, we’re back with our financial columns again. We took some time off during last week’s boring holiday trading action. At which point we segued into a long weekend during which we attended the Contemporary American Theater Festival (CATF) in nearby Shepherdstown, West Virginia. We’ll be posting our reviews of all six new or nearly-new plays just as soon as we get through our editorial backlog here.
Also coming up: Our latest portfolio activities, as we implement our longer-term strategy to liberate our investments from the kind of whipsaw nonsense we continue to endure this summer. And try to isolate our portfolios from the weekly blasts the media routinely cause by ignoring our current great economy and corporate earnings while emphasizing only news of tariff terrors and the worst that’s yet to come. But probably won’t.
As always, stay tuned.