It is apparent that Donald and his policies now
drive the stock market more than any other financial news. Donald has said that his trade
tariffs and are not specifically targeting China, but includes all
countries that are engaging in unfair trades with America. However, the political
reality is that Washington has been China's focus.
Is Donald simply engaging his typical “Art of the Deal” negotiation,
or is he really serious about stopping China’s technological
advancement by targeting “Made in China 2025”? Such a
stance could prove more destructive to the
bilateral relationship over the longer term than tariff hikes.
Traders and investors need to
be concerned about 2 important dates which could potentially move the market. On 30 June, Donald will announce the details of the restrictions on Chinese investments and enhanced export controls. Then then, on 6 July, the US' trade tariffs as well as the Chinese's 25%
tariffs on US$34bn worth of goods are due to go into effect.
This blog assumes that Donald, being the focus of the market, will not take
things too far as it risks damaging the
US stock market, which many Americans' wealth depend on. Today the Asia
markets are bullish at the expectation of a good outcome on 30 June, after Trump had made some conciliatory comments on the nature of the coming investment
restrictions.
He will now use a strengthened existing agency and national
security review process to scrutinize Chinese acquisitions of American
technologies. There has already been more than a hint of this market dynamic at
work this week when the S&P500 recovered some of its losses on Monday after
Navarro was presumably ordered to issue a less combative statement on the
investment restrictions.
All posts and charts are for educational and illustration purposes only
