Market reaction to Trump's China tariffs? DOW crashes over 700 points!!!

I'll be waiting with you.

 

The Dow broke though the long term (200 day) moving average today. Lets hope it does not close below the LTMA. In the coming days we would hope that it finds a base at this level and then rises.

I would not be investing until this base is confirmed. If we get a confirmed break below this level - electronic trading will kick in and we could see a very serious decline.

 

You need to go back a ways to understand the post office.
Once upon a time Congress decided the Post office should fund it's pensions for 75 years. Right or wrong this is what made the post office unprofitable.
Now keep in mind the Post office is now unprofitable not because of Amazon, they make money on Amazon, but because the rules changed. Do they lose money on packages? Sure. They lose money overall. I don't know where Spanky got the idea that Amazon isn't good business - maybe Faux.
I don't have a problem with good tariffs to stop a problem, I have a problem with dumb tariffs.

 

What is more silly was those who were cheering Trump for markets moving higher .. are now cheering while they move lower.

 

(sorry, playing thread tennis).

It's not abnormal.
This isn't good, but it is long way away from being outside normal parameters.
This is neither a crisis, a crash nor a disaster.

After they sell these shares, they will use the money to buy other shares.
Expect a rise in the stock market imminently.

Don't panic. Stay calm.

 

So you like that China and others can dump under-cost steel and aluminum into our country at the cost of American factories and their workers? I remember a time when American products were the best you could buy on the market. Now what we get from overseas is junk or cheap but not made to last very long. Sorry, but I will pay more for American products or well made products over Asian or South American crap.

 

Sorry, I left out the reduction in regular mail and marketing mail. Do you remember those?

 

I remember a time when in America people didn't automatically assume you hated America just because you disagreed with a certain course of action that clearly has negative consequences for wide swaths of America. JK, we've always been this way.

 

Off to buy some more cheap stocks. It's the same as with metals. I have silver that I bought at $20, at $18, at $16, At $15; currently I buy silver at under $17. On average, I'm doing OK, but if I waited to buy metals till bottom falls, I'd not have any.

 

If China subsidizes steel to sell it to us at below cost, isn't that good for America, based on free market economics? There are many US companies who do exactly the same thing, selling subsidized products to push out the competition and create a quasi-monopoly. I don't see Trump fans ranting against such free market practices, in fact they espouse them. Only when China does it, it is bad??

I am not against policies to stem the tide of offshoring. A starting point would be taxing the likes of Tim Cook and Apple. However, Trump just gave them a huge tax cut. Where is the consistency? Why is Trump for American steel workers, but against workers in the electronics industry (or the MAGA hat industry)? What he is doing right now is just picking winners and losers. I though conservatives were against that.

 

Well, if china is dumping cheap steel into the US they aren't doing a very good job of it:

U.S. Commerce Department statistics show that China supplied 73,594 tonnes of steel in May, a tiny 2.4 percent of the 3.12 million tonnes imported by the United States that month.

China’s exports to the United States also represented just 1.05 percent of its total steel product exports in May of 6.98 million tonnes.

 

Loss leaders. They sell it cheap to put your refineries out of business. Once they have succeeded, they can set the price higher again because you have no where else to go that sells it..

So it's good when you take out your rivals and not good when your rivals take out you.
Sort of like in a gunfight. Same duality/hypocracy. It's good to shoot the other guy but it's not equally good to get shot by the other guy.
We aren't looking for equal outcomes. We are looking to win.

 

If you want to say "loss leaders practice = bad", then make policy against this kind of practice, whether domestic or international. People are hurt by domestic firms using the loss leaders practice too, mainly by elimination of competition leading to eventually higher prices.

To start a trade war to punish one small loss leader seems to me as inconsistent policy.

 

Brutal

S&P 500 off 2.23% at the close

Worst start for a second quarter since the ******* Great Depression era (1932) according to Bespoke analysts

Reckless orange tariff boy and his band of incompetent republican advisers single-handedly DESTROYING global markets...

 

I don't think loss leaders are bad if they are working in my favour, only if they don't.

I don't think China and the EU will start a trade war with America.
And if they do, I think the EU will get arse raped by one and fall apart at the seams. And find China harder to predict.

I think America is leveraging it's trade imbalance and given the size of it, they would be missing a trick not to.
China and the EU have been taking this relationship for granted which defeats much of the point of having it in the first place.

This is a good time for a rebalance. Economy is in a period of world growth. There is margin for error and rivals such as the EU are very weak.

I'd like to declare an interest at this point. I have my own bias in this. I expect my own country, the UK to be having the same sort of stand off with the EU next year.
I would certainly like to see them having had a hard reality check before we get there, otherwise it's us that will be teaching them this lesson. And am very interested in closely comparable model of this upcoming change of policy.
Tariffs is a hot political issue here too. As are trade imbalances. Steel imports, and NATO non contribution.

The status quo. The old bad deal. Is over.
We're not doing that any more either. War if necessary. It is a war we will win. Easily.

 

So how do they put us out of business when they are only a couple % of our imports.
Why is our steel $200 a tonne more expensive than anyone else's?
I ask this because I am curious.

 

If they dump cheaper steel on your market, steel mills, will go out of business.

I'm sorry I don't know what price your steel is or why.
I do know that there is a global steel glut right now. That capacity for steel production greatly outmatches global demand. (China has stopped building cities)
Steel mills will be closing and many of them, it's just a question of which ones.
All steel producing nations are having the exact same problems you are and all of them attempting to alleviate it in the same way.
EU steel tariffs against China for example are currently 73.7%.
America's proposed tariffs are in fact rather mild, globally speaking.

Just indeed as they have all had the exact same problems so many times before and all attempted to reduce it in the exact same way so many times before.
Protection of steel industries? We've all seen it before. Big hoo har, loads will close.
World will not end.

For myself ( bare in mind I am bias) the key difference this time is the EU's response.
Bellicose.
Rather than offer concessions, like the rest of us, they did the EU thing which is threaten trade war.
And this is a ****ing stupid way to talk to America, even when you aren't doing it from a position of weakness, Which they are.
I think, they don't get how weak they are and that the EU leadership is so divorced from the people who live in Europe that they don't even care. They are picking fights they themselves personally can't lose money from, Raise tariffs. and the tax goes to them.

 

After a year of having their collective heads in the sand, many investors are finally beginning to realize that we have a bunch of reckless, incompetent republican morons sitting behind that economic wheel.

We tried to tell the fools before the election that more than a hundred years of history has shown that the market performs SIGNIFICANTLY better when a Democratic administration is in the White House.

Many ignored that fact when they entered voting booths ... now they're gunna have to learn it the hard way...

 

I guess Obama and Trump were the exception to that rule then.
Because it flatlined under the last democrats and has gained 60% since.

My guess is that it got a real bounce from Trump's tax reforms.
Trump's reception at Davos pretty much says it all.

The world media had it in for him, but the worlds finance guys received him like a hero.
Opposite for Obama.

I get programmed by the media. I had expected him to get booed and hissed.
I don't know why, he's always impressed me on money. But you fall into that easy trap I expect.
I rave about his campaign budget. I know he's a very rich man.
His TV persona is Mr Business. And yet I'd slipped into the mindset that he is hated by all.
And then Davos.

And now since this thread, I've seen the stock market graphs and I have to say he's the most credible world leader on economics yet.

I'd bet on him vs leftonomicists any day of the week.
This really is his strong suit. He is in a position to do an incredible amount of good for the American economy. Not that his critics will ever admit it. But they suck @ money.
Ultimately.
And he doesn't.

So stock market is 500 down again today.
But still 5,000 up over all. 25%
If my money was on Trump, I'd be considerably up right now. Laughing all the way to the bank.


The deficit is the part that doesn't impress me so far. Not scoring any points there.

 

Because the rich love him because of his anti-regulation and low taxation stance, he's now the "most credible world leader on economics YET"? Okay, there, guy.

 

Didn't assume you hated America. Most people will buy the cheap stuff over the well made stuff. That's the way it has been for many years which has caused negative consequences for many cities. We have always been that way. I wore Levi's and only Levi's for many years but when they moved their operation to Mexico I never bought another pair.

 

You will have to name some of these monopoly companies your talking about. It's not that China is selling cheap steel but it is funded by the government and sold on the market below cost in order to drive out all competition. As far as Apple is concerned (for openness I own Apple Stock) they have billions of dollars overseas and with the new drop in business rates Apple and many other companies are being given to bring that money home and be taxed at a lower rate. Apple has agreed to invest 6 billion in a new plant. Trump is for fairness.

 

They also backdoor sales through other countries. Even if what you say is true , what is the big uproar?

 

1) Amazon selling books below cost to drive small book stores out of the market.

2) Great, Apple is investing $6 billion, but getting $47 billion in tax breaks. The Fed could have just as well given $47 billion to build plants, then at least ALL of the new money would be invested, not just a small fraction.

Again, I ask: Why is Trump using the stick with China steel, but the carrot with Apple, both being guilty of the same job destruction in America?

 

Yeah, I have heard about that. We added tariffs to Vietnam because of that. It was another whopping 1%. But that is the right way to do it.
You are aware we have already placed tariffs on Chinese steel in 2015 and 2016 right?
What do you think the real goal is? Do you think a 2 or 3% reduction in steel imports will accomplish a significant part of it. Because if you do, it would probably be easier to just ask China to reduce it's exports by $10 billion or so.
No, this is a political stunt at our countries expense.