JPMorgan warns investors that Trump’s tweets on purported China deal appear ‘completely fabricated’ (Raw Story link): A new note from investment bank JPMorgan advises traders to not buy into the hype that President Donald Trump has ended his own trade war with China. As reported by CNBC’s Carl Quintanilla, JPMorgan is telling investors that Trump’s declaration this week that China will immediately drop all tariffs on American cars has no basis in reality.
In particular, the note said that investors should have “valid reason for caution” when it comes to investing on the hopes that Trump is on the verge of a major breakthrough with China.
Shortly after a dinner meeting with Chinese President Xi Jinping during the G-20 summit in Argentina, Trump excitedly declared that China would eliminate tariffs on American cars and would also start bulk buying American soy beans once again. However, the only concrete measure to have come out from the meeting seems to have been a decision to not further escalate trade tariffs while the United States and China try to hammer out a new deal.
Mod: This next report comes from the usually pro-Trump Washington Examiner.
The Dow Jones Industrial Average closed down 800 points (3.1 percent) for the day, almost entirely in response to Trump brandishing his trade-warrior regalia by saying that trade amounts to foreigners “raid[ing] the great wealth of our Nation.”
Just this morning, a Washington Examiner editorial noted that the markets had responded tremendously well to reports over the weekend of a trade truce between the U.S. and China. My editors perceptively warned that “if Trump's tariffs stand for long, or if this truce collapses and a trade war with China proceeds, the economy will suffer serious damage.”
Immediately, the stock market tanked. This is par for the course for the last two months. Due to a number of factors, all major stock indexes suffered a horrid month of October and a wildly erratic November — but the worst downturns, even before the October swoon, repeatedly followed indicators, often from Trump himself, that trade tensions were growing rather than easing. Conversely, every single hint of a trade truce has produced a mini-rally.
Trump last week proposed stripping away electric-car subsidies from General Motors as punishment for the automotive giant moving to cease production at plants in the United States and Canada. But then his chief economic adviser, Larry Kudlow, said the White House would do no such thing. Targeting a single company, he explained, would be illegal.
|"The Adventures of Tariff Man" video link|
The whiplash nature of Trump’s economic policies and pronouncements bore tangible consequences on Tuesday, when U.S. stock markets cratered amid investor skepticism of Trump’s China talks. The Dow Jones industrial average dropped 799 points, or 3.1 percent, while the Standard & Poor’s 500-stock index fell 3.2 percent and the Nasdaq dropped 3.8 percent.