Trade War Bloodletting Continues…
Dear Rundown Reader,
Investment expert Greg Guenthner mentioned this medieval torture device to his readers yesterday.
It’s a simple vice, sometimes lined with sharp metal points, that’s clamped to a victim’s fingers or toes to inflict incredible pain.
It reminds us of the saying, “putting the screws on someone.” An apt description of Trump’s latest tariff threats.
But will the threats work? Many feel the longer this fight draws out, the more likely the U.S. loses.
Today’s Rundown weighs the odds that Trump ends up losing after all.
Your Rundown for Thursday, August 2, 2018…
Trump Threatens to Put the Screws On China
Trump’s going for China’s jugular.
And his trade war is going next level.
The Wall Street Journal reports this morning, Trump is considering raising tariffs on the basket of $200 billion in Chinese goods from 10% to 25%.
Dialogue between the two nations has clearly grinded to a halt.
China however isn’t going down without a fight. “China’s position is firm and clear: Pressure and blackmail from the U.S. won’t work,” notes Geng Shuang, of the Chinese Foreign Ministry, as reported by The Journal.
It’s obvious this war is going to be a long one, and we know China’s not afraid to fight dirty.
China’s well known for manipulating its currency to meet economic objectives. They’ve done it before and now it appears they’re at it again, sinking the yuan in order to offer cheaper goods abroad.
And Trump’s new threats show how frustrated he is China hasn’t rolled over.
But the longer this war plays out the worse it will get for the U.S. There’s a ticking clock on Trump’s leverage.
The Wall Street Journal notes, “right now U.S. leverage over China on trade looks strong, but the advantage may not last long.”
China will let their economy fall apart before they give in.
How can you beat an opponent so willing to fall on its own sword?
Now, turning to the markets this morning…
Market Rundown for Thurs., August 2
Yield on the 10-Year Treasury sits at 2.978% this morning, down 0.025.
S&P 500 futures are down 15.25 to 2,795.
Oil stays flat at $67.08. Overproduction sinks oil below $70, but if prices are cheaper at the pump do you care? Does Big Oil or consumer sentiment win this war?
Gold continues its slide, down another $2.60 to $1,215.
Bitcoin goes for $7,572 this morning, according to CoinDesk. BTC is holding on for dear life just above its key support level.
We’ll talk again on Friday.
For the Rundown,