OK, first off. I’m not saying that Trump is responsible for the fall-off in Chinese consumer consumption. There have always been built-in problems with China’s top-down command/mercantilism. Furthermore, there is absolutely no doubt about China’s hanky-panky when it comes to trade. BUT. Cutting off your nose to spite your face is definitely NOT a smart way to react.
Unfortunately, the galactic brain of Donald Trump is now defining US trade policy. And that brain, or guts, or whatever, has decreed that ‘trade wars are easy to win’. Thus, at precisely the time when an inevitable ‘hitch’ has occurred in both the stock markets AND real global economy, our President is actively promoting policies which will only serve to rev up nationalist sentiments and aggravate the situation. He actually had a ‘Game of Thrones’-style poster of a svelte-alternate reality Trump looking all Churchill-like with the caption “Sanctions are Coming” splayed out on the table in front of him at today’s ‘Cabinet Meeting’.
Meanwhile, nobody bothered to explain to him that a third of the S&P500’s revenue derives from sales to foreigners (even more pronounced if you consider tech profits — then it’s more like 40+%). After the bell today, Apple (APPL) announced that it has experienced an unexpected 10% hit to next quarter earnings, due entirely to a catastrophic falloff in mainland Chinese demand.
At the time of this diary’s writing, AAPL was of off more than 7.5%. Apple is the world’s largest tech company. Tomorrow may be harrowing.