Category Archives: Stock Market

Business, Economics, Stock Market

Dow Drops 925 Intraday on Trump’s Tariffs and Yuan Devaluation

photo montage / Lynxotic

Bonds Hit Record Low Yields in Wild Wall Street Action

The carrot is gone and the sticks are out. After Trump’s now infamous tweet late last week that set markets in the US tumbling, now, the other shoe is dropping as China’s retaliation plans are revealed.

After Trump announced an additional 10% tariff on $300 billion of China goods entering the US, to be levied starting September 1st, China has already implemented a response.

First, the People’s Bank of China, which is the equivalent of the US Fed, allowed the yuan to fall below the peg of 7 to the dollar that has stood as a psychological barrier and is considered an important level to maintain.

Lowering the currency exchange rate has the effect of countering the tariff by increasing the number of yuan generated by dollar denominated exports.

Naturally there are more complex peripheral and ancillary effects that will be debated by economists until the end of time.

The People’s Bank, for what it’s worth, claimed that the drop was “driven and determined” by market forces.

The yuan is now at its lowest point relative to the dollar since 2008.

A second form of retaliation that China appears likely to implement is the reduction of or an outright halt on purchase of US agricultural products.

An increase in the quantities of US agricultural products was one of the concessions negotiated during the recent talks with China during the G-20 summit.

Trump tweeted his displeasure at the lack of follow-through on this promise:

And seemed to imply that this lack of cooperation was possibly the trigger behind his sudden decision to announce the 10% increase in tariffs.

With the US States that comprise the bulk of the large farmers that would be most affected by this issue being the same States that helped Trump win a narrow victory in the Electoral College in 2016, this is a “counterpunch” that will likely not sit well with the current resident of the White House.

These small steps, partly perhaps only threats, partly already in effect, are but a tiny slice of possible retaliation by the Middle Kingdom.

Tariff-Man Joins Circular Firing Squad

Tariff-Man is learning, apparently very slowly, some of the many reasons that Trade Wars are famous for not having any winning countries, but rather, are just a “circular firing squad” which produces only losers.

A common boast throughout the Trump Administrations tenure has been that the stock market is at or near all time highs and that he himself is the sole reason it is. With his trade policies being widely blamed for dramatic market losses that boast may have to be taken out of his toolkit, at least for the foreseeable future.

If today’s responses from China, followed by the stock market reaction, are any indication of where we are headed, it looks to be a bumpy Fall with September and October being statistically dangerous months for the financial markets, in general .

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Breaking News, Business, Stock Market

Update: Europe Markets Down, China Responds, Tariff-Man Threats Reverberate

Photo Montage / Lynxotic

Additional 10% Tariffs on $300 Billion will Commence September 1st…

Germany’s DAX down 2.5% while the Hang Seng Index loses 2.35% after Trump’s Tweets and Threats. China says they will respond in kind: “If the U.S. is going to implement the additional tariffs, China will have to take necessary countermeasures,” Hua Chunying, China’s Foreign Ministry spokeswoman said at a briefing in Beijing on Friday: “China won’t accept any maximum pressure, threat, or blackmailing, and won’t compromise at all on major principle matters…”

The DJIA was up more than 300 points on Thursday, when the announcement was made, then it ultimately ended the session down 280. The new tariffs are on the 300 billion in goods that have been, until this point, coming into the country without a toll. There are also 250 billion in Chinese goods that already have a 25% levy attached.

Recent trade negotiations in Shanghai concluded on Wednesday with little or no progress. Talks are scheduled to resume in September.

Speaking on July 30th, before reporters Trump speculated that China may be thinking of delaying a resolution until after the election in 2020, saying:

“They would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden…. They’ll pray that Trump loses. And then they’ll make a deal with a stiff, somebody that doesn’t know what they’re doing like Obama and Biden, like all the presidents before.”

Donald J. Trump

Calling the tariff a “small additional levy” Trump also said in a series of tweets that China’s promise to buy large amounts of agricultural products from the US, was not kept.

While speaking to reporters this afternoon at the White House, he also threatened to lift the percentage to 25% and beyond, “But we are not looking to do that, necessarily”.

Products that will be included in this new batch of tariffed goods will be consumer electronics such as iPhones, toys and shoes, among other items.

There was some surprise noted, as the meetings and discussions in Shanghai appeared to end on a somewhat positive note, initially. Now, with this announcement, there is a sense of the talks having fallen short of any progress at all.

Fallout of the Trade War to Begin Hitting Home

Trump continues to claim that China will pay these levies, although studies have shown that the consumer in the US will ultimately pay through higher costs on all tariffed goods. The higher prices will also harm sellers in the US due to a reduced volume of sales.

While there is sill also a lot of “carrot” talk, how the negotiations can also take a turn for the better at any time, coming from both sides, it does not appear that there is much substance to be gleaned from these pronouncements.

Since the percentage of some of the products that will be affected, such as toys, include as high as 85% currently coming from China, these tariffs can have a substantial effect on the marketplace.

Also, possibly unintended beneficiaries to the trade war are neighboring countries such as Vietnam and Cambodia, that are already showing signs of increased activity due to the shifting of origin of manufacturing to those countries in order to avoid the levies.

Tariff-man is staying true to his self-given moniker and in September, as the next wave hits, it is yet to be seen what the economic effects will be, either in China or here in the US.

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Business, Politics, Stock Market

China Responds to Trump Threats: “We Will Not Back Down”

Photo / Monique Ly

Dow swoons again on news; down 400 points in early trading

The South China Morning Post reported today that Chinese State Media has responded to the threats in Trump’s tweets from Sunday to raise Tariffs, as well as adding new tariffs on additional goods.

“Things that are unfavourable to us, no matter how you ask, we will not take any step back. Do not even think about it.”

‘Peoples Daily” via wechat

Read More: Owes or Owed: Either Way Trump’s Dealings with Bank of China are Questionable

After first blocking media mentions or screen shots of Trump’s twitter threats early Monday, Beijing responded with defiance and even attempted a bit of theatrics, “Do Not Even Think About It” was the “Dirty Harry-esque” headline in the Hong Kong news outlet’s article cited above.

In spite of the heated rhetoric and brinkmanship from both sides, the Chinese Government still plans to send an envoy to the talks, although no time frame was specified.

From the U.S. perspective, according to the Trump administration, the talks are progressing “too slowly” and a mechanism for holding China accountable to reduce intellectual property violations and open up its economy is as yet undefined.

The harsh stances on either side to date, however, do not rule out the possibility that both can claim “victory” after looking tough at home, after ultimately announcing some kind of agreement to end the tensions and the tariffs. While this may even be the likely outcome, the potential for higher tariff percentages and new levies on other goods (on both sides) are a serious possible reality going forward.

Read more: ’Blowout’ by Rachel Maddow: Corrupted Democracy, Rogue State Russia and the Richest, Most Destructive Industry on Earth

Quoting the ‘Peoples Daily’ from its WeChat public account: “Things that are unfavourable to us, no matter how you ask, we will not take any step back. Do not even think about it.”

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Business, Economics, Politics, Stock Market

Dow Futures Drop over 500 points after Trump Threatens on China Trade

“Tariff-Man” talks tuff when traders expect cream puffs

Photo / Adobe Stock – Lynxotic

Nasdaq futures down over 2%

Futures began to tumble when Trump announced he would raise tariffs on $200 Billion in Chinese goods and soon add a levy on $325 billion more. In the largest drop in Futures since January, traders appear to be reacting to the expectation of a positive resolution to the trade tensions, only to be surprised by the escalation by Trump.

Read More: The Dow Drops more than 6% as “Trump Bump” Vanishes into Thin Air

Brinksmanship? Or will both sides make good on threats?

As reported by the Wall Street Journal, China may be pulling out of the talks, which only raises the stakes. It’s entirely possible that both sides are talking tough in an attempt to gain an advantage and claim victory, if and when the talks resume. A sudden positive, “unexpected” reversal on both sides would likely spur a knee jerk market rally, for example, so volatility in the markets appears to be likely for the week ahead.

Needless to say, a trade war escalation would be a serious event for both sides. Although China may feel the negative effects of such an all out Tariff avalanche first, the potential downside for the U.S.A. is not clear and would be by no means insignificant.

Photo / South China Morning Post

With both sides broadcasting extreme positions, on the other hand, the talks may well halt, which would “require” Trump to make good on his threats (in order to save face). Stay Tuned.

Read More: Five New Books about how We can Change the Direction of the USA in November and Beyond

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Business, Economics, Stock Market, Tech

E.U. Slaps Google with $1.7 Billion Fine

Antitrust Violations Pile Up Against Big Tech

Google was fined 1.7 billion dollars (1.5 Billion Euros) for online advertising antitrust violations. This is the third fine from European authorities since 2017. The fines, along with those against other big tech firms, have established the European Union as the most consequential oversight body in policing internet tech firms that are seen as having too much power.

Europe is a leader in taking a stronger approach to reigning in firms such as Amazon, Facebook and Google (Alphabet). A broad consensus holds that these huge tech behemoths represent a danger to fair competition.

“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites, this is illegal under E.U. antitrust rules.”

Margrethe Vestager, Europe’s top antitrust watchdog

 A variety of infractions have been committed by Google in the past couple years. They were fined for misusing their Android ownership to undercut rivals. Google was also fined for attaching an increased amount of text ads to third party companies who used the Google search bar.

The internet search leader bundled its ad platform within the third party custom search engines. This practice undercut Microsoft, Yahoo, and other digital advertising companies.

European authorities have been more aggressive with tech companies, demanding improved privacy, transparency, and even copyright regulations. Competition Commissioner Margrethe Vestager has fined Google over 3 billion dollars since 2017. Alphabet/Google owes a total of 8.2 Euros (9.3 billion dollars). Google hasn’t paid the fines yet, and plans to appeal. Google stock is up 17 percent in 2019.

In the U.S., Senator Elizabeth Warren, Democratic candidate for President in 2020 said that Facebook, Google, Amazon and Apple should be broken up due to various antitrust issues.

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Business, Economics, Stock Market

Stock Market Outlook 2019

Consensus Views Or Contrary Swans

Funny thing about consensus vs. contrary views – they are often identical if you believe what you read. “Wall of worry” and “Slope of Hope”: it’s all irrelevant if you are wearing blinders and have no mooring, or any basis for what the facts are.

Add to all that the fact that most opinions are paid advertisements, mainly for sell-side firms, and it’s tough to wade through the B.S. As per usual, according to a survey from CNBC, the S&P 500 will reach 3000 by the end of 2019.

According to my own non-scientific survey this is the 20th consecutive year that such surveys predict a gain in the market. A prediction for the coming or current year is almost always positive. The negative predictions are saved for “next year” (in other words later in 2020 as seen from in early 2019). Then, of course, the predictions change, and turn positive, just before the year turns.

Such nonsense goes even deeper while pundits and hacks will cite “pervasive pessimism” in the face of almost total bullishness to claim to have a “contrary” view while in reality herding like Spanish bulls in springtime.

“It’s tough to make predictions, especially about the future”

Yogi Berra

Using actual data such as the Put-Call Ratio, VIX, AAII Sentiment Survey, or, for example, levels of margin debt and mutual fund money flows, can at least give a picture of the state against which one intends to be contrary.


Then, once in a while, in full-on Black Swan fashion, the prevailing “wisdom” blows up and everyone declares shock that such a thing could happen. A recent example of this was the disastrous collapse of the “short vol” trade in February of 2018.

A one-eyed man in the land of the blind can see a bit more than the rest. A first step is to be aware of the hype and see past the herd. In the last 100 years, Bull markets have tended to last longer than Bear markets (which move faster) and that alone leads to a bias toward a false idea that investing in stocks can lead to a steady, constant gain profile.

To sum up our outlook for 2019 in terms of end of year projections, the word “grim” comes to mind. Bear Markets follow Bull Markets, Raising Rates pop bubbles, the 2008 excess was never dealt with, and on and on and on. Clearly, the most bullish possible prediction anyone looking at facts could possibly make is that the next down phase in the market might come a bit later (2020 anyone?) rather than sooner.

Naturally, that is exactly what the “pessimistic” pundits are predicting. Far from pessimistic in reality, this is the most wildly optimistic, bullish possible take on the current juncture imaginable. Perfect for the true contrarian outlook which points toward a real Bear Market, sooner rather than later.

This is not to say that it looks like all gloom and doom for the coming year(s). There are exciting changes afoot, particularly in media and digital communication, and, as with all times of great change, the aftermath of the coming storm points toward a cleansing and realignment of world economies and cultures. Bring it on…….

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Business, Stock Market, Tech

Apple Reports First Quarter Results

Services, Mac and Wearables Set New All-Time Revenue Records

Apple today announced financial results for its fiscal 2019 first quarter ended December 29, 2018. The Company posted quarterly revenue of $84.3 billion, a decline of 5 percent from the year-ago quarter, and quarterly earnings per diluted share of $4.18, up 7.5 percent. International sales accounted for 62 percent of the quarter’s revenue.

The 15% drop in iPhone sales. though no surprise, was coupled with a year over year annual revenue decline of roughly one-half of 1% which is the first yearly decline since 2001.

As has historically been the case with Apple, volatility and drama related to this earnings report will be soon washed away by many new innovations, scandals and continued excellence from the world’s foremost technology manufacturer.