Crude oil plunged on concerns the global economy would weaken further after President Donald Trump ended a tariff ceasefire with China. The president said additional tariffs of 10% on the remaining $300 billion in Chinese goods would be added in September.
Futures for WTI crude dropped 7.9% to $53.95. WTI broke a 5-day winning streak with its worst daily performance in more than 4 years.
“The oil market has been the highest hit asset around from the trade war and this only exacerbates the situation,” said John Kilduff Founding Partner of Again Capital.
“It was a rough day for oil even before the tweet came out,” said Kilduff. “The oil markets didn’t get help from the stance the Federal Reserve took yesterday and then got hurt by the president’s announcement.”
You may have noticed that many markets plunged right around the same time......12:28pm CDT.
Oil, cotton, beans, corn. They all plunged hard.
This must have been when the news about the increase in tariffs hit.
I've reluctantly accepted Trump's use of tariffs as a bargaining chip up to this point. Now I am beginning to think he's made "one too many trips to the well".
He probably realizes that the Chinese are holding out for the 2020 election results just like the rest of us, and hopes/believes that tightening the screws a few more notches will tip the scale. He's probably relying on the fed to loosen monetary policy to help finance the move. It's a big gamble and slowing the economy, risking recession, will not help his chances. The economy is the biggest chip he has.
He could have held firm, allowed the underlying strength of the economy to carry decent growth through the year and then, in the event he takes a 2nd term, tighten things as required.
One way or another, this trade war will end shortly after the 2020 election. Either Trump will win and the Chinese will not be willing to face another four years of tariffs.. Or he'll lose and we'll return to previous trade agreements. Surely, no president from either party, besides Trump, will continue.
Could somebody who agreed with these tariffs please tell me what the objective of this approach is. Because by every measure after a year of this it appears it is failing.
The objective has been obvious and clearly stated from the start.
The question is, can the method, tariffs used as bargaining chip, achieve the objective , and the answer is certainly yes.
Unfortunately, the Chinese are aware that they have a lot of allies in this country and they are banking on political changes/pressures to win.
Grab a big bowl of popcorn and sit back and relax and watch the movie. It is a real good one. I know what is going on but people diss me. I sold the TOP of this market to within 1.5 s&p points and posted it. Trump is doing what needs to be done. Like I said, as the movie unfolds, you will see the plot.
Please tell us how the movie ends. Does the S&P hits 1800 before or after oil hits 200? TIA.
Well there you go Tim. I totally agree with you on that. The Chinese feel that Trump will loose in 2020 and I totally agree with them. They too know what is going on and Trump is not going to win and the next schmuck will be President and the Chinese know that they will get a better deal with them.
After . . . .
If I remember the original statement was we need to bring jobs back to the USA, latly it seems to be about everything but that. It morphed into it was a out the trade deficit then moved onto IP then forced tech sharing and now it seems to be this need to punish the Chinese. To date Companies are redirecting supply chains away from China to avoid the tariffs but none of these jobs are coming back to the US. So if the objective is to bring jobs back to the US it is and will continue to be a failure.
Why do I get the feeling you've been here before?
Jobs were certainly part of it. Trade deficits are a subset of that. All of what you mention is related, nearly directly, to jobs.
And by most measures, Trump appears to have that "Magic Wand" that so eluded the previous admin.
Forbes says we're seeing MFG job creation at 10 times the rate. Granted,the article is 9 months old, but recent numbers support the premise. Here's a few snippets.
"As is the case during recoveries, jobs bounced back, with seasonally adjusted nonfarm employment expanding almost 12% from March 2010 until January 2017, when President Obama handed over the presidency to Donald Trump.
But during the same period, manufacturing employment grew only 7.7% with manufacturing payrolls virtually flat in the last 21 months of the Obama administration."
"At a town hall in June 2016, President Obama famously said that some manufacturing jobs “are just not going to come back.” He went on to mock then-candidate Trump by saying he’d need a “magic wand” to make good on this manufacturing job promises.
Months later, as the shock of a President-elect Donald Trump was still being absorbed, New York Times columnist and economist Paul Krugman tweeted on November 25, 2016, “Nothing policy can do will bring back those lost jobs. The service sector is the future of work; but nobody wants to hear it.”
Comparing the last 21 months of the Obama administration with the first 21 months of Trump’s, shows that under Trump’s watch, more than 10 times the number of manufacturing jobs were added."
For those not realising what Trump has been doing, the rise of tariffs, is exactly the reason corporations have been moving their production facilities back to the US.
China still doesn't own enough of our debt to make more than a small dent. And they know it. But 25% of their economy, is based on US consumer purchases of Chinese made goods. And their advancement in technology, is largely based in the pirating of our intellectual property. Yet another issue they won't concede to.
The people of the US may indeed pay a price for the tariffs. And for reduced trade with China. But it brings back US based businesses. And that is in favor of the people.
Thanks Mark!
This is what defines all of Trump's policies........in favor of the people living legally in the US.
"This is what defines all of Trump's policies........in favor of the people living legally in the US."
I wonder why the left hates that so much?
There is an even greater reason and strategy behind the tariffs. Not just to pull manufacterers back to the US. But also to regain control of intillectual property, and more competitive "apple for apple" trade. There's a lot more at stake here, than meets the simple eye.
You totally nailed it. I just LOVE this part:
There's a lot more at stake here, than meets the simple eye.
So MUCH more
Regardless of who wins the WH, I don’t think they move away from what Trump started. Let’s face he, he did the dirty work and few people would debate that it needed done. Any success on that front would be a significant feather in someone’s cap. Democrat or Republican.