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Trade War fears crush US stocks. Traders mount powerful China freak-out

Written By | May 23, 2019
Trade War fears

Another horrified Idiocrat. Still from YouTube clip of Mike Judge’s classic 2006 satirical film, “Idiocracy.”

WASHINGTON. We return to the stock market lists Thursday after a couple days off to find the Dow tanking some 350 points not long after the trading day opened. Why? You know why. Trade War fears. Big time.

China Trade War fears loom large

Yep. It’s all about China, international trade and the now looming Trade War to which the Chi-coms are now committed. I know, I know, the lamestream media blames this all on Trump. But exactly which president do they blame for allowing the Chinese government to steal our technology and manufacturing companies blind for the past 30 years? Trade War fears have dominated market action in the not-so-Merry Month of May.

Impeachment or Infrastructure? Truth or Consequences for Nancy and Chuck

Worse still for investors, stocks weren’t helped either Wednesday – or today – by Trump’s entirely justified walkout yesterday from his scheduled meeting with Nancy Pelosi and Chuck Schumer. The supposed topic of the meeting was a continuation of discussions on legislation to underwrite massively stimulative infrastructure bill. Both Trump and the Democrats were strongly backing. At least in a general way. But, like the Idiocrats they and their followers are, the Dems reflexively pressed the magical #NeverTrump button before heading for 1600 Pennsylvania Avenue.

But just prior to this meeting, to placate her frothing-at-the-mouth “Impeach Trump” contingent, Pelosi held a presser during which she essentially accused the President of being a crook.

Later, as the White House meeting was ready to begin, a pissed-off Trump entered the room and acknowledge he’d learned of Pelosi’s remarks. In one of his moments of striking clarity, Trump declared effectively that the House Democrats could either spend all their time until Election 2020 trying to impeach him; or instead, spend all their time working for the constituents that recently gave the House back to them. Their choice.

But, since Pelosi and the Dimwitted Dems had just essentially declared for impeachment, Trump correctly noted they’d already made their decision. Thus, he concluded, he was wasting his time. At which point he abruptly terminated the meeting and walked out of the room.

Trump does a presser. Stocks tank, Fed is no help

Trump then stepped out to what at least looked like an impromptu presser of his own and pointedly elaborated on his decision. And that was that.

Stocks had been wallowing in low-level negative numbers prior to this. But when word got out that, effectively, any thought of a trillion-dollar-or-more infrastructure package was out the window hit the market hard. The Fed’s announcement that they were pleased as punch with the current interest rate status quo didn’t help the bull case either. Stocks ended Wednesday in a sullen mood.

Cascading stock market is all Trump’s fault. The media says so, so we know this is true

The anti-Huawei moves of the Trump administration ensnared more and more tech companies, even including some from abroad. To help the media and scare traders to death, the Chi-coms cranked up their formidable anti-US propaganda mill. Subsequently, the complicit, blow-dried cable news leftists dutifully trumpeted this garden variety Communist agitprop. And voilà! Sell orders cascaded onto America’s trading floors. Which could soon make May 2019 look like the cruelest month before it’s all over.

As we finish this article and approach 1:45 p.m. ET, the selling wave, which had subsided slightly, is surging again, and may crest later today. Right now the Dow is off close to 400 points (-1.5 percent). The S&P 500 is off an equally nasty 42 points or so (-1.48 percent). And the tech-heavy NASDAQ, freaked out by the Huawei Tech Wreck, is down a whopping 143+ points for a 1.85 percent loss.

Things could get worse Thursday. Or not. In this entirely headline-driven market, guessing how things will close Thursday is a fool’s errand. Although things don’t look too hot right now.

Other voices: Tim McPartland

Tim McPartland, our favorite preferred stock and baby bond guy, had this to say about what might happen next.

“As most of us know a drop in common stocks of 1, 2 or even 4% over the course of a week is no big deal–but if we reach 2, 3 or 4% drop in 1 day there is always a potential of the nervous nellies starting to bail out. Now, with the excepting of the usual suspects of some shippers and retail related REIT preferreds we are NOT seeing anything unusual–in fact when I look at the preferred volumes trading is quiet.”

Other voices: Bill Blain

Bill Blain, I writer I haven’t encountered before, very sensibly put the current China-US Trade War fears into some perspective, via a credited piece in ZeroHedge. He adds this nasty-looking chart which proves China is already suffering some severe trade fallout, as supply chains clearly choose to move elsewhere.

trade war fears“In terms of market action, trade fears really seem to have settled in as the dominant theme on markets. But if markets are simply wondering when there will be a solution, then they may be waiting for the wrong thing. While the mood remains negative as the market waits for a US/China agreement/resolution, maybe the new long-term reality is an increasingly and deliberately bifurcated global economy? The US and its allies vs China. If it sounds familiar – it should in terms of 1945-89. The West won the last Cold War on the same basis – and the economic benefits accrued to the free capitalist states….

“…This is no longer a trade spat – this is morphing into full economic war. The US is willing to take a short-term hit in the form of higher consumer prices, and welcome inflation, from Chinese imports until global supply chains re-adjust and new domestic and international lines open, knowing the long-term damage is limited. Meanwhile, the hit to China is long-term and directly on production, thus right across the economy right at the most difficult phase of economic transition. Chinese economists are talking about a 1-2% hit to GDP. I suspect much more plus increased domestic social and political tension. Xi is in more trouble than we think.”

Xi in worse trouble than Trump?

Well, heck, that’s a good thing to know China’s Fearless Leader Xi is in more trouble than we are. Maybe all that Chi-com bluster is meant to paper over their own Trade War fears. At least in Bill Blain’s opinion. You’d never get this angle by listening to the MSM, particularly CNBC and, frustratingly enough, Fox Business as well. For them, it’s more evidence of Trump’s stupidity. Impeach him! But that’s what we get for allowing the leftists a good 50 years to maneuver us into becoming a nation driven by Idiocracy and Idiocrats.

A Tesla postscript

Long time readers might be interested to know that slowly, surely, the Great Tesla Hoax is unraveling. It’s unraveling at a statelier pace than the Russia Collusion Hoax unraveled, but it’s still unraveling. Word is that perhaps several years ago, Apple (trading symbol: AAPL) floated a bid for Tesla to Elon Musk. Allegedly, that bid got rebuffed. Isn’t it interesting that Apple eventually wound down their once-vaunted electric-self-driving-car skunk works.

Given the slow cave-in of Musk’s fantasy-car empire, Apple won’t likely bid for Tesla again. Unless, perhaps, the company is on the verge of bankruptcy. Which is something we’ve predicted for years.

Tesla’s stock (TSLA) is still a great fantasy short sale. Or well worth investing in long-dated put options. BUT. And it’s a big but. Bulls tend to bail this stock out big time whenever the short sellers get too confident. So neither of these plays tend to be a very good idea for us smaller investors.

In conclusion

But as TSLA shares sink slowly into the sunset, it is bloody tempting to go short, isn’t it? We’ll have the Memorial Day long weekend to think about this. And those very real US-China Trade War fears.

– Headline image: Another horrified Idiocrat. Still from YouTube clip of Mike Judge’s classic 2006 satirical film, “Idiocracy.”


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17