Risk assets fell out of favor swiftly & severely following a threatening Tweet by our president warning he’d punish China on trade. Stocks & the Chinese yuan slid sharply. Digital assets came under pressure.
The 2 biggest economies have been painstakingly negotiating a bilateral economic deal for months, and both sides have been playing nice in the sandbox – until now.
Say what you will about Mr. Trump but the guy certainly knows how to stir things up on social media. For decades, US presidents used the press to backdoor trial balloons into the world economy – a way to take the temperature of market participants. Mr. Trump loathes the media, distrusts it, and let’s be honest – in this particular instance of “trial balloons” – is proving there is no longer any need for it. The media feels the exact same on all three counts, in reverse.
Anyways, a Tweet will probably cost at least $500 billion in global equity losses by the time American kids get to school tomorrow. I plucked that number out of thin air but whatever the final figure, it ain’t insignificant.
The Vietnamese stock market might rally 10% on the news as competition is long overdue & happening. Other countries are willing to make cheap plastic goods for Happy Meal’s & this fact isn’t lost on our Tweeting President.