Dow plunges more than 600 points on confusion over status of U.S.-China trade deal

[MTAtech]

The Fed has no real reason to hike rates...unless they want to put their thumb on the scale.

Sounds like a self fulfilling prophesy to me.

Ah, how views flip based upon who is in power:

From the WSJ...

Republican presidential nominee Donald Trump ratcheted up his criticism of the Federal Reserve and Chairwoman Janet Yellen on Monday, saying the central bank is keeping rates low to help President Barack Obama.

Mr. Trump, presumably speaking of Ms. Yellen, said interest rates have been kept low “because she’s obviously political and doing what Obama wants her to do.” Mr. Trump, in an interview on CNBC, added “what they [the Fed] are doing is, I believe, it’s a false market. Money is essentially free.”

Ms. Yellen, he said, “should be ashamed of herself.”

 

[digsbe]

I'm glad we have a president willing to confront the Chinese. We must decouple as much as we can from China and do all we can to undermine their country, economy, foreign influence, and brace for their economic fallout which will inevitably cause a blip to the US economy. It will be like ripping off a band-aid.

 

[Mycroft]

Nobody who lived through the Great Recession should ever make such a stupid comment.

Ah, how views flip based upon who is in power:

From the WSJ...

The Fed certainly changed their tune when Trump unleashed the economy, didn't they.

 

[MTAtech]

I'm glad we have a president willing to confront the Chinese. We must decouple as much as we can from China and do all we can to undermine their country, economy, foreign influence, and brace for their economic fallout which will inevitably cause a blip to the US economy. It will be like ripping off a band-aid.

Ok, what are Trump's demands? I've been following this and while Trump rants about other countries’ unfair trade practices, a complaint that has some validity for China, he hasn’t made any coherent demands. That is, he has given no indication what China could do to satisfy him, leaving them with no option except retaliation.

 

[digsbe]

Ok, what are Trump's demands? I've been following this and while Trump rants about other countries’ unfair trade practices, a complaint that has some validity for China, he hasn’t made any coherent demands. That is, he has given no indication what China could do to satisfy him, leaving them with no option except retaliation.

From what I've gathered, it's that China stop: forced technology transfers, allow fair competition for foreign companies within China, buy more things from the US to even the trade imbalance, increase intellectual property protections, reduce tariffs on US products, etc.

Truthfully, for national security, world peace, and human rights reasons the US should use these trade abuses as an excuse to launch a cold war on China. China, in my opinion, is the single largest threat to global peace and if allowed to continue to rise will start WW3.

 

[mike2810]

The Dow Jones is still up from when President Obama left office. 19,827 vs 25,027 today. That is a 5,200 point gain.

 

[MTAtech]

The Fed certainly changed their tune when Trump unleashed the economy, didn't they.

Trump didn't "unleash the economy." Below is quarterly GDP growth and the unemployment rate over the last few years. It would seem that the economy was "unleashed" long before Trump. What Trump did do is provide a sugar-rush tax-cut, financed by borrowing, in a low unemployment economy, which when it runs out next year will result in a sugar rebound.

 

[Visbek]

The Fed has no real reason to hike rates...

Incorrect. One of the most important jobs for the Fed is to keep inflation in check, and inflation is rising. The Fed counters inflation by increasing the federal funds rate.

Another aspect is that interest rates are still near historic lows. This means the Fed has very little room to maneuver in a downturn. As long as things are still looking good (in most, but not all, respects) they definitely need to try and raise rates when they can.

Another aspect is that cheap credit is not a good way to fuel an economy. It can result in poor investment and bad decisions, as we saw leading up to the last financial crisis.

Another aspect is that the Trump tax cuts were, to put it mildly, very poorly timed. What he did was the equivalent of pouring lighter fluid on glowing coals. It might look pretty for a few quarters, but it doesn't improve the fundamentals, and sparks inflation (see above).

We should also note that the Fed is not going to wreck the entire US economy by raising interest rates by 25 basis points 3 times a year.

None of this changes the fact that Trump is behaving incredibly irresponsibly and erratically when it comes to China. The end result, unsurprisingly, is increased volatility in the markets.

 

[SLC]

Time to buy.

 

[SheWolf]

https://www.washingtonpost.com/busi...60ce2a8148f_story.html?utm_term=.97fc34732992

The economic agreement President Trump said he reached with Chinese leader Xi Jinping on Saturday showed signs of unraveling Tuesday, with the White House threatening new penalties against Beijing and multiple officials seeking to downplay expectations for an eventual deal.

Investors, who had applauded the deal on Monday, turned sharply negative Tuesday. In midday trading, the Dow Jones industrial average had dropped more than 800 points or about 3 percent. The Standard and Poor’s 500-stock index and tech-heavy Nasdaq were also down about 3 percent.
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The stories about this trade deal with China keeps changing. This is not surprising considering the fact that Trump keeps changing his version of reality.

It's like when Trump met Kim Jung Un, and announced Kim would ended the nuclear program. I knew better than believe Trump's announcement on China, and his declaration of his own, personal success. He is always boasting, misstating the facts, and spreading fake news. I think investors should have known better than to rally based on Trump's own words.

We can't trust or believe Trump

 

[SheWolf]

I've been saying for months that the economy has had some storm clouds on the horizon. Now they are starting to come into clearer view.

Brace yourselves, everyone. 2019 is going to be a bumpy ride.

I agree, and I am starting to wonder about the long term impact of this trade war. Trump will be gone eventually, but I am not sure how much the rest of the world is going to trust us, and a new leader will have to sort this all out. This could be a huge mess for generations.

 

[Tangmo]

Exactly.

Oh...to be sure...some people care about Wall Street. You know, the speculators...the people who run the computers that make the micro-second transactions...those people care. Those are the people who **** their pants and lose a billion dollars when Trump tells them that that China will negotiate or he'll increase tariffs.

In the meantime, working people are working. Factories are making stuff. People are buying stuff. Main Street is moving right along.

Me? I don't care about Wall Street. I care about Main Street.

Main Street's closed off due to a sinkhole.

The sinkhole started on Wall Street and raced out to Main Street in no time at all.

Just getting deeper it is. So you might want to head for the hills now.

 

[Tangmo]

I'm glad we have a president willing to confront the Chinese. We must decouple as much as we can from China and do all we can to undermine their country, economy, foreign influence, and brace for their economic fallout which will inevitably cause a blip to the US economy. It will be like ripping off a band-aid.

Global markets know China is overdue for the inevitable "major adjustment" to its wildly didactic economy and Rube Goldberg financial system that's run by the Party Boyz for themselves in their one party state. Capital continues to flee China, averaging $1 Trillion annually the past several years. Forex reserves that are supporting the RMB, which global markets are depreciating on a continuing basis, are off a trillion in usd value and counting. It's compounded over there by the fact the Chinese never could count honestly -- not ever.

From what I've gathered, it's that China stop: forced technology transfers, allow fair competition for foreign companies within China, buy more things from the US to even the trade imbalance, increase intellectual property protections, reduce tariffs on US products, etc.

Truthfully, for national security, world peace, and human rights reasons the US should use these trade abuses as an excuse to launch a cold war on China. China, in my opinion, is the single largest threat to global peace and if allowed to continue to rise will start WW3.

Indeed. Amen even but only up to a point. Trump's China advisers mean to set back the CCP economy to circa 2000 which is nowhere effectively and again. Year 2000 was before all the wild west 14 percent annual growth which was anyway almost all big construction projects that stuffed the Party's pockets which in China are very deep. Chief among the China hawks in the WH is Peter Navarro of UC who shares the hard view with Trump himself. Trump does in fact mean to take down the CCP Boys' economy. Set it back significantly. Navarro's filled his toolbox with the exact tools you mention. Xi and the CCP Boyz in Beijing know this. If Xi can't fend off Trump and Navarro and show signs very soon he can do that then the Party Boyz will likely trade Xi in for a new model at the top of the line. Xi wanted to make agreements from the outset of the trade war but the Party Boyz want a hard line. Navarro knows this and he wants Xi's head over his mantle. If I were Navarro I'd go ahead now to pick out the exact spot. Cause the bottom line of Xi coming out of Argentina is that he got fooled again.

 

[Saladin4]

From what I've gathered, it's that China stop: forced technology transfers, allow fair competition for foreign companies within China, buy more things from the US to even the trade imbalance, increase intellectual property protections, reduce tariffs on US products, etc.

Truthfully, for national security, world peace, and human rights reasons the US should use these trade abuses as an excuse to launch a cold war on China. China, in my opinion, is the single largest threat to global peace and if allowed to continue to rise will start WW3.

Some serious paranoid ranting here......

 

[MSgt]

Some serious paranoid ranting here......

He's right about China's threat. Add in Russia and we see two major geoeconomic players that have been playing the global system, which we created, far better than we have since Nixon. China and Russia have found great success within our capitalist, private industry, and free-trade system. But they have used state-owned corporations and state-owned banks as tools within their foreign policies to gain political and economic influence into Asian, Middle Eastern, and African governments. State-owned banks and businesses give them greater control and this has been affecting even our allies. Russia's pipe-line diplomacy into Western Europe is the most notable.

- The Chinese government has already been introducing the Renminbi as a secondary global monetary system through the BRICS Bank and AIIB, which has received the highest credit ratings from the three biggest rating agencies in the world, and is seen as a potential rival to the World Bank and IMF.

- The China Development Bank and Brazil's BNDES already have lending portfolios that outstrip the World Bank.

- Because the World Bank and IMF offer loans with conditions, autocrats across Africa, the Middle East, and much of Asia have turned to China, which offers loans without condition. In other words, China has been strapping these autocrats with debts that they cannot pay, which leaves the country in the hands of the Chinese.


Our counter-punch has not been to play the geoeconomic game on their terms. On the contrary, we aren't really playing at all. Recently, we have actually been systematically removing American influence everywhere. Russia's growing influence in Western Europe could have been checked already had we not suspended the Transatlantic Trade and Investment Partnership (TTIP) for an entire year and introduced a piece of the energy boom that North America has been experiencing for years. China's growing influence across the Pacific could have been checked had we not withdrew from the Trans-Pacific Partnership (TPP) in 2017. Now, even Australia is having to stand largely alone against China's interference in Australian politics. And our removal from the Iran deal and pissing off Muslim governments over the Jerusalem Embassy move merely exacerbated Russia's influence in Syria and there status as the nuclear WalMart of the Middle East.

And what has been the actual latest U.S. response to this geoeconomic tsunami across the world? Largely nothing. For example: After acknowledging that there is a concern about rising Chinese influence in the Pacific, the U.S. has once again defaulted to a military solution. It has recently decided to partner with Australia in developing a naval base on Manus Island. In other words, as China's state-owned banks and state-owned companies walk right into these governments and pull out a chair, we are going to show them some warships. In the meantime, the Chinese men in suits are shrugging.

 

[MSgt]

I'm glad we have a president willing to confront the Chinese. We must decouple as much as we can from China and do all we can to undermine their country, economy, foreign influence, and brace for their economic fallout which will inevitably cause a blip to the US economy. It will be like ripping off a band-aid.

But...he is not confronting the Chinese. He is grandstanding within his trade war and calling it "America First," but we aren't undermining Chinese foreign influence at all. We have actually helped it. Chinese influence is growing across the Pacific, the rest of Asia, the Middle East, and Africa. We have failed to confront the BRICS Bank, the AIIB, and the China Development Bank, which has all been buying autocrats and gaining massive influence. And by withdrawing from the Trans-Pacific Partnership (TPP) in January 2017, even Australia is having to stand largely alone against China's interference in Australian politics. Ultimately, Trump's "America First" is shallow and we are setting ourselves up for a tougher end game.

And the funny thing about his trade war is that he chose to be publicly obnoxious about it instead of handling it like a proper diplomat. He did this despite needing China to be on board when it came to North Korea. And when it came to his tax-cuts, which was accompanied with a significant increase in government spending, he put the country on a path to borrow the most it has since the Great Recession. And from who? The Chinese! So not only has he set up regions for China, he is setting the U.S. up to.

 

[Mycroft]

Nobody who lived through the Great Recession should ever make such a stupid comment.

Main Street's closed off due to a sinkhole.

The sinkhole started on Wall Street and raced out to Main Street in no time at all.

Just getting deeper it is. So you might want to head for the hills now.

That sounds like a stupid thing to say.

Tell me...how is Main Street "closed off"? Are people suddenly out of a job because Wall Street lost 600 points? Have any factories closed? I haven't heard about it.

Fact is, Main Street isn't affected all that much by the nervous nellies who speculate in the stock market.

 

[HenryChinaski]

Who cares about Wall Street? Those idiots will lose a trillion dollars if a bear ****s in the woods unexpectedly.

The media still hasn't come to understand that our economy isn't about Wall Street anymore.

Only someone without a 401(k) or other employer sponsored retirement plan that relys on financial markets and the economy would say something so ignorant.

 

[Mycroft]

Only someone without a 401(k) or other employer sponsored retirement plan that relys on financial markets and the economy would say something so ignorant.

As I've said...perhaps those people you speak of should be pissed at the trigger happy speculators who caused the stocks to drop. Perhaps they should reconsider where they put their retirement money.

Tell me...do you think Trump should be more concerned with Wall Street gamblers? Or should he be concerned about people who are trying to provide food for their families?

 

[HenryChinaski]

As I've said...perhaps those people you speak of should be pissed at the trigger happy speculators who caused the stocks to drop. Perhaps they should reconsider where they put their retirement money.

Tell me...do you think Trump should be more concerned with Wall Street gamblers? Or should he be concerned about people who are trying to provide food for their families?

Just as I thought. You have no retirement investments thus no skin in the game. Throughout Obama’s presidency, the economy turned around. Retirement 401ks grew exponentially. Last two years, they’ve taken serious dents and will take years to grow back. Every time Trump opens his mouth, the markets take a hit which helps to push the working mans retirement savings back. I’d wager that trump is profiting greatly of the volatility that he’s injecting into the markets too.

 

[Acadia]

That sounds like a stupid thing to say.

Tell me...how is Main Street "closed off"? Are people suddenly out of a job because Wall Street lost 600 points? Have any factories closed? I haven't heard about it.

Fact is, Main Street isn't affected all that much by the nervous nellies who speculate in the stock market.

I don't recall that Obama's Presidency living and dying by each tick of the stock market. It's almost like the Trump haters want our economy to fail. Oh, wait, they DO want it to fail.That'll show us for supporting Trump! The "told ya so" moment is what they live for.

 

[SenorXm/Sirius]

Just as I thought. You have no retirement investments thus no skin in the game. Throughout Obama’s presidency, the economy turned around. Retirement 401ks grew exponentially. Last two years, they’ve taken serious dents and will take years to grow back. Every time Trump opens his mouth, the markets take a hit which helps to push the working mans retirement savings back. I’d wager that trump is profiting greatly of the volatility that he’s injecting into the markets too.

Funny how when the Markets hiccupped under Obama the Republicans and Con media machine blamed Obama and screamed the world was going to end. But now when the markets dip under Trump it doesn't matter, it's not Trump's fault and no one cares...lol

 

[Mycroft]

Just as I thought. You have no retirement investments thus no skin in the game.

Don't be a fool. You know nothing about me.

Throughout Obama’s presidency, the economy turned around. Retirement 401ks grew exponentially.

And people who were more concerned about making ends meet from month to month didn't have it so good. The economy didn't "turn around" for them.

So yeah...I guess you'd say that Obama was more concerned with the Wall Street gamblers than he was with people just trying to provide food for their families.

Last two years, they’ve taken serious dents and will take years to grow back.

LOL!! "serious dents". Have you forgotten the state of Wall Street before Trump was elected and the state of Wall Street after a year? It's STILL better than it was under Obama.

Every time Trump opens his mouth, the markets take a hit which helps to push the working mans retirement savings back. I’d wager that trump is profiting greatly of the volatility that he’s injecting into the markets too.

Perhaps those trigger happy Wall Street gamblers should just take a chill pill. Our economy is doing great.

 

[Mycroft]

Funny how when the Markets hiccupped under Obama the Republicans and Con media machine blamed Obama and screamed the world was going to end. But now when the markets dip under Trump it doesn't matter, it's not Trump's fault and no one cares...lol

That's because while under Obama...and even before Obama...Wall Street was the only thing people worried about. Even the Republicans worried about it. But none of them worried about Joe Blow family man who just wanted to put food on the table.

Trump changed that. He made Main Street the concern. That's who he is working for...not Wall Street.

 

[OlNate]

I don't recall that Obama's Presidency living and dying by each tick of the stock market. It's almost like the Trump haters want our economy to fail. Oh, wait, they DO want it to fail.That'll show us for supporting Trump! The "told ya so" moment is what they live for.

Oh, FFS, we get that moment every day.... The moment we live for is when mindless Trump supporters pull head from ass, and start to realize the risk he presents, and not just in your country, but the global economy in general.