A monster reversal followed yesterday’s stock market plunge, but we have another plunge at the opening bell on Tuesday. Here’s more…
It’s been a rough open for the US stock market over the last two days.
Here’s a look the plunges in the Dow at the open on Monday and Tuesday:
Many are suggesting the Plunge Protection Team was behind the massive reversal from yesterday.
Time will tell if there is a similar “reversal” today.
What is going on?
Lot’s of trade war tension.
The fire was stoked on Sunday with President Trump talking tariff hikes again:
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
And it continued on Monday:
The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!
— Donald J. Trump (@realDonaldTrump) May 6, 2019
What has China been saying for their part?
Here’s some propaganda from Global Times (bold added for emphasis):
The US side claimed on May 6 that the US plans to raise the tariff imposed on $200 billion of Chinese goods from 10 percent to 25 percent on Friday, and $325 billion of additional goods will also be taxed shortly at a rate of 25 percent.
US side complained that China-US trade talks were proceeding “too slowly,” and said the tariffs paid to the US “are partially responsible for US’ great economic results,” but “have had little impact on product cost, mostly borne by China.”
The two countries just concluded the 10th round of trade talks last week and agreed on a new round of talks this week in Washington.
A spokesperson of China’s foreign ministry said Chinese delegation is preparing to travel to the US for consultations.
Beijing’s response indicated that China will focus on the talks rather than engage in public opinion warfare.
The previous 10 rounds of China-US trade talks have brought remarkable progress, but contests become more intense at the end of the race. It remains unknown if US side’s attitude suggests the US intends to give up negotiations or whether it seeks to maximize US interests at the last minute.
What matters most now for China is calm. The Chinese public wants an agreement, but meanwhile is well prepared for other potential outcomes, including a temporary breakdown in talks.
Some analysis on the trade deal chaos, from WAM: