…millions of exuberant stock-buying voices cried out in terror, and were suddenly silenced.
Headlines from The Wall Street Journal that merely confirmed what everyone and their pet rabbit already knew – that $200 billion more China tariffs were set to hit next week as the comment period expires – sparked selling… everywhere.
While WSJ admits that Trump has yet to make up his mind, they report sources say he backs the additional tariffs (which anyone who can fog a mirror would know from his stance for the last month).
Trump’s decision is hardly a surprise: as we said before, from Trump’s perspective, i.e. the stock market, US GDP, consumer confidence and so on, he is winning the trade war, so he has little to lose especially with the Chinese stock market deep in bear market territory. And yet, the sharp drop in U.S. stocks suggested that investors were caught offside, and as Bloomberg notes, “Maybe the progress on NAFTA somehow lulled the market to believe he was putting on China on the back burner until the mid-term elections.”
Maybe, but when it comes to Trump, it’s all through the lens of the stock market, and until something there snaps, the status quo will continue.
What happens next? China will retaliate in kind once the U.S. tariffs become official. With EM in turmoil and the S&P 500 already at all-time high, “it’s hard to put a positive spin on the news.”
Sure enough, Stocks dumped:
Boeing and CAT crumbled…
Yuan is getting whacked…
Copper is getting clubbed…
“surprise” – Trump’s not backing away from China!
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Author: Tyler Durden