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Home / World / Trump's trade ventures have evaporated the Dow's profits for 2018

Trump's trade ventures have evaporated the Dow's profits for 2018



The calm predictability, which was the hallmark of the stock market in 2017, was replaced by the turbulence in the first half of 2018, when investors were shaken by the threat of trade threats between the US and China.

The escalating Dow Jones industrial average has wiped out all of 2018's gains, moving close to a 10 percent correction range compared to its January 26 high.

Some would view the pullback as a buying opportunity, especially robust given the other economic conditions. The gross domestic product is growing daily to $ 20 trillion. What does an investor need to do? Stay on course. Stay with your plan. Long term.

But the headline risk of the President's tweets, White House announcements, and breathless policy laps made for a pretty tough second quarter. If not for the tariff talk, Steve Forbes said at the Fox Business "Morning with Maria" a few days ago, the Dow would probably jump thousands of points.

The main indices rose on Friday and posted slight gains as the quarter closed. The blue-chip Dow recovered at the end of a turbulent week, which rose 55 points on Friday.

Standard & Poor's 500 stock index and the tech-heavy Nasdaq composite index were positive on Friday, with the Nasdaq ending the season more than 6 percent for the second quarter.

Most market watchers blame President Trump, who is working on tariff threats almost every day, for the unrest.

"That's all," said Ed Yardeni of Yardeni Research. "His tax cuts have dramatically increased earnings, but his protectionism is a potential threat to the economy."

Despite the relatively blue sky, there are many other economic threats that are fueling investors' existing fears. At the top of the trade talks are the oil price at annual highs, a stronger US dollar, the Federal Reserve, which anticipates interest rate hikes, and the slowdown in Europe's economy.

Even the halo over technology stocks was shaky in the last week of June, while the Nasdaq went through one of the worst weeks of the quarter. Throw a national Donnybrook, which is expected over an empty seat of the Supreme Court, as well as a threatening intermediate election, and you have a nervous "institute".

The markets on Wednesday are a typical example. The Dow swung 441 points with mixed messages from the White House.

Trump's trade advisor Peter Navarro told CNBC on Monday that "there are no plans to impose investment restrictions on any countries that somehow interfere with our country." Treasury Secretary Steven Mnuchin responded with a statement that the government would seek legislative redress through the Foreign Investment Committee in the United States, rather than more direct methods to restrict the theft of vital US technology by competing countries (Pssst. We mean China.) 19659013 ] [ Jeff Zients has been with Obama for a long time – and now he's investing heavily in investment]

"If there's mixed news, that's regrettable again," Mnuchin said on CNBC's question about contradictions from co-anchor Andrew Ross Sorkin. The Dow responded positively to the comments of Mnuchin and raised 285 points.

But by the end of the day, the benchmark had given up all this and more to shoot 165 points into the red.

"I do not think everyone knows how serious the president is or not about trade," said Michael Farr, a Washington Investment Manager. "I heard someone say," Most people stop when they shoot themselves in the foot. The president wants to reload. "

The S & P 500 has remained 2 percent above the water since Friday, but fell about 5 percent from the high of January 26. The hardest hit sectors are the industrials and materials sectors Industrials declined 3.6 percent in June and fell more than 5.8 percent from the year after the close.

The Chinese are suffering as well, with the Shanghai Composite benchmark on Thursday 0.9 percent down to 2,786.90, the lowest in more than two years.

The president has money in the bank to play with if he wants to keep pushing the Chinese trade 500 has risen 26.96 percent since its election on November 8, 2016. This number grows to 31.18 percent when considering stock dividends.

Analysts say the president cares too much about the stock market, especially with the deciding one n intermediate elections four months out.

"There's a limit to how far the president can go to battle when stocks drop enough," said John Lynch, senior investment strategist for LPL Financial, in a recent report titled "Trade Tensions Playbook." [19659021] "President Trump has a track record of starting a negotiation from an extreme position and then moving towards a compromise, and we expect a settlement with China in trade and minimal economic damage in the US and abroad," Lynch said ,

Howard Silverblatt, Senior Index Analyst at S & P Dow Jones Indices, suggests that market jokes stop reading the tea leaves waiting for any action Trump takes.

"The difference is rhetoric against what I actually do," said Silverblatt. "Do not pay attention to the man behind the curtain," he said with a nod to "The Wizard of Oz."

The pay talks have been bubbling for months, but the threats have risen after Trump left the Seven of Quebec Group summit in early June. He left Canada, refusing to sign a joint communiqué, calling Canadian Prime Minister Justin Trudeau "very dishonest and weak."

On June 14, Trump extended the trade dispute by announcing that he would impose a 25 percent rate on 50 billion Chinese products. China responded in the same way, and the market slipped.

Trump then raised the Ante to China with a salvo of $ 200 billion, followed by retaliatory tariffs from India, a profit warning from a European automaker that blamed tariffs, and Trump's call for a 20 percent tariff on automobile imports from the European Union ,

Then came reports that Trump wants to ban Chinese investments in US technology to protect our progress. Another report came out on Friday on Axios that Trump wants to withdraw from the World Trade Organization, which could bring world trade in motion. Mnuchin called the report "an exaggeration."

Investors reacted, even as Trump's business team tried to dispel fears.

"As much as the government wants to tell you that we have a trade dispute, Wall Street says it will lead to a trade war," said Farr.

The technology sector, whose FAANG – Facebook, Amazon.com, Apple, Netflix, Google Parent Alphabet – have borne the bulk of the bull market in recent months, showed its vulnerability, although by more than 500 percent since then Bear market low of March 9, 2009 has risen. (Amazon CEO Jeffrey P. Bezos owns The Washington Post.)

The chatter during the week was that the turmoil and the sale there are a confluence of factors, including investors, the quarterly profits and typical seasonal weakness with the onset of summer to take.

"While Trump's ongoing tariff dialogue seems to hold leading stocks, investors should not be too surprised that markets are experiencing weakness due to seasonal concerns," said Wayne Wicker, chief investment officer at ICMA Retirement. "This is an election year that typically presents markets with additional challenges, and historically the fourth quarter offers a slight recovery that investors may want to keep in mind."

Jamie Cox of Harris Financial Group said the markets were selling because some companies have warned that tariffs will burden the quarterly result, due in July.

"If revenues are lower than what people expect them to do, stocks will have to turn around," Cox said.

That means it could get worse before they get better. Whatever happens, expect more volatility.

"If he had just given us the tax cut and Fox News looked at the midterm elections," Yardeni said, "the market would be a lot higher today."


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