Posted on 10/24/2018 11:28:10 AM PDT by Freeport
Guess who is winning the tariff war. China? The U.S.? Neither?
Well, one way to look at the results since President Donald Trump fired the first salvo in March is to compare the performance of the rivals’ stock markets since that day.
Using the Dow Jones Industrial Average and China’s Shanghai Composite Index, here are the results.
The Dow is up about 370 points, a rise of about 1.5 percent. Subtract a half a year’s worth of inflation, and it’s up about 1 percent.
What about China’s Shanghai index?
Hmm. Down a whopping 30 percent, adjusting for inflation.
Of course, many factors beside trade plausibly affect share prices in both countries. China’s economy has been slowing, and that may be irrespective of trade.
As economist Martin Baily, who ran President Bill Clinton’s Council of Economic Advisors, suggests in an email, rates of return to manufacturing companies have been declining; investors have been reacting accordingly. Robert Glauber, who help run the Treasury Department under George H. W. Bush, adds that investors may be responding to the increasingly (and increasingly discussed) fragility of the Chinese banking system.
So perhaps not all of the market decline in China can be pinned on the trade war. But in the long run, stock prices reflect the expected profitability of the companies whose ownership they represent.
(Excerpt) Read more at pbs.org ...
Ping!
My 401K is down about 8% in the last month or so.:-(
Also, couple this with Trump’s position to the International Postal Union that China has not been paying the true cost of shipping since the 1950’s when it was given “developing nation” postal rates. Hardly the case today, which means our USPS has been subsidizing their parcels.
Yep, but you’d be down a lot more if you were in China.
Me too, but it could be worse and it will get better.
China is a bit farther upstream than we are. Their recession started in Q3. We’ll get our turn in 2019. In 8-10 months those charts will be reversed.
More important is slowing growth in China as manufacturers move to countries to avoid tariffs, etc.
A growing economy can carry more debt than one that isn’t. And China has lots of debt.
Even with the new trends in Halloween - a new excuse to buy Chinese shit at dollar stores.
>China is a bit farther upstream than we are. Their recession started in Q3. We’ll get our turn in 2019. In 8-10 months those charts will be reversed.
There’s a question to that. In Q2, inventories were blown out by consumption and just started restocking/buying up in Q3. Unless there’s a strong downturn, Q4/Christmas spending will be another huge boon for retail and another blow-out for inventories.
I agree that the economy has to turn down sometime, but Fed interest stayed at .25 from 2008 to 2015! and it now at 2.25 in only 3 years! They even know it will go to 3.5 in 2020 and still no real disruption. I think the real culprit will be student loan walk-aways and a slow shift to CDs and money market, but I really don’t see another huge dip.
Really? Then why is oil up so much? Doesn’t compute for me. The world economy IS China. With fresh new supplies of oil being found in the US against a backdrop of a world stagnating economically, I can’t understand the oil rally.
Possibly, but this seems to happen every October, so I’m not sure it can be attributed to the US - China Trade War.
Have you ever noticed your 401(k) really goes down when the market tanks, and it seldom gets the full bounce when the market goes up.
The folks that pick the stocks, are really clever at picking the real losers.
US economy is running hot and Iran is offline. Trump complains on and off that Saudi production is too low.
This is not a good day for this article. US markets plummeting.
“Have you ever noticed your 401(k) really goes down when the market tanks, and it seldom gets the full bounce when the market goes up.”
Yes I have noticed that. It creeps up ever so slowly, but will tank overnight, resulting in huge monetary loss.
Then it starts creeping up before the inevitable fall.
Yes...
OK, THAT is true about the US economy.
Ask the Fed why ours has dropped....china is in free fall..... +1 Trump!
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