By Samuel Taube
Transcript:
Samuel Taube (ST): Joining us today is Matthew Carr, the Emerging Trends Strategist of The Oxford Club and the editor of Switch Trade Alert.
Today, we are talking about the recent turmoil in the stock market and the escalating U.S.-China trade conflict. Matt, thanks for joining us.
Matthew Carr (MC): Thanks for having me, Sam.
ST: First of all, how much of the sell-off we’ve seen over the last few weeks do you ascribe to this trade conflict?
MC: I would say actually a great deal of it.
The question that we have right now is whether this trade skirmish is going to boil over into an all-out trade war.
We saw futures collapse more than 300 points on Wednesday morning when China announced $50 billion in retaliatory tariffs on a wide range of U.S. agricultural products, airplanes and autos.
I was watching it when it happened. In just a few minutes, the Dow ended up opening down almost 2%. So we’re now in this period where the Dow is moving several hundred points up and down almost every day, whereas last year, we didn’t have any sort of 1% moves on the Dow – but now this is the norm.
We’ve seen in the last seven out of eight sessions that the Dow has moved at least 1%, both up and down.
Earlier this year when we had our first big correction, I warned that this was just the beginning – that it was the first correction of 2018.
I also warned that one of the biggest culprits to market volatility going forward wasn’t going to be White House turnover or corporate earnings or anything like that, but it was going to be these surprise policy announcements. And that’s what’s unfolding.
That’s what’s creating all this market uncertainty. We have China and the U.S. one-upping each other. And that’s what’s moving the market.
ST: It’s certainly a powerful force. How long do you think this could keep going? And realistically, what do you see as the long-term effects?
MC: As for how long it could go, I’m not totally sure because like I said, these are just proposals at this point.
But we’ve seen this escalate very quickly, and China right now has publicly stated it won’t back down. It won’t be bullied. It refuses to look weak at the moment. So there’s this game of chicken going on. Who’s going to flinch first?
And what surprised me was that China just slapped a tariff on soy. I thought that would be one of the last salvos because soybeans are a must in China – and the U.S. is the biggest exporter.
But the finance minister went after soy because he said it’s important to the U.S. economy.
The new proposals would slap a 50% tariff on cars made in the U.S. that are shipped into China, including manufacturers like BMW and Mercedes. Those cars are made here in the U.S., – in South Carolina – and shipped overseas, and those are what’s really popular in China.
So China has been very surgical with their …read more
Source:: Investment You
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