EDITOR'S NOTE
The following is a special guest dispatch from veteran scribbler and CNBC dayside boss Dan Colarusso.
The CNBC news alert buzzed yesterday at 5:28 AM. My yogurt and Grape Nuts would have to wait. President Donald Trump had turned the NATO meeting into a business news story simply by saying he thought a trade deal with China, already a cloud over the markets for months, would be better off done after the next U.S. election.
The reaction was predictable; a spasm of selling that turned U.S. stock futures red – a shade stocks remained the rest of the day.
This new turn in what I've been calling the Forever Trade War was just the latest market-rattling shift. It's funny. We know there's supposed to be smart money out there but it seems that even the most hardened investors can't quit chasing drama – whether it comes from the presidential Twitter feed or Chinese state media – that never seems to settle in any concrete progress towards a deal.
To borrow some Twitter dialect, I'm old enough to remember Friday, when talk was of a strong December and a Santa Claus rally cementing for investors as banner year in the markets. On Monday, our own website ran a great story headlined – with very little hyperbole – In 2019, Almost Every Investment Worked. Turns out it wasn't wrong, just early. Or maybe spot-on, depending on the next few weeks.
It has gotten more complicated, though. This week the trade war became officially triangulated. On one front there is China, still in a deadlock with the U.S. over intellectual property protection, agricultural buys and free competition. Yet on Monday, a White House tweet aimed Trump's tariff bazooka at Brazil and Argentina. Why? Well, because among other things, China has been buying soybeans and other agricultural products from those countries instead of sidelined U.S. farmers.
It didn't end there. France and the U.S. found their otherwise friendly relationship roiled by a 3 percent French tax on U.S. tech companies. That digital tax prompted counter-tariffs on famously French things such as Bordeaux wine, cheese and skinny, fancy cigarettes….well maybe not the cigarettes, but you get the picture.
Now, all eyes are trained on Dec. 15, the date on which tariffs will be placed on billions of dollars of things made in China and meant for U.S. markets. Will they happen? Will there be a Phase One-and-a-Half? Will Washington or Beijing make a small concession to allow a large economic exhale in the first quarter?
President Trump seems determined not to give in, and once said trade wars are easy to win. He could be right. My hunch, though, is that it's been anything but easy to manage for companies such as Apple, Deere and any number of semi giants. Their supply chains, growth markets and share prices are trapped in a state of flux. It may be better for them in the long run – more open markets in China and IP that can actually be protected – but for the next 12 months, CEOs and investors may be sleeping with one eye open, waiting for the next 5 AM trade war news alert.
[Note from Kelly: sounds a lot like maternity leave!]
Have a great week everybody. More headlines below.
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Rabu, 04 Desember 2019
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