Things are sure getting wild on Wall Street.
U.S. Accused Of “A Declaration Of War” Against China As The Stock Market Teeters On The Precipice Of Disaster
Stocks originally began plunging when news broke that Huawei CFO Meng Wanzhou had been arrested in Canada at the behest of the United States and would be extradited to the United States, where she would reportedly face federal charges of violating Iran sanctions.
Trade fears ratcheted up after news broke Wednesday that Huawei CFO Meng Wanzhou was arrested by Canadian authorities in Vancouver, where she faces extradition to the U.S. The arrest — which took place Dec. 1 — decreases the likelihood that a permanent U.S.-China trade deal will be reached. Huawei is one of the largest mobile phone makers in the world.
Meng Wanzhou is the daughter of the company’s founder, Ren Zhengfei, and has recently become his presumed successor. Ren is a former Chinese military official who founded the company more than 30 years ago. It has become China’s premier global brand and it central to its “Made in China 2025” plan to dominate high-tech manufacturing. The company has been making a push to become the world leader in 5G technology and met with strong resistance from U.S. officials.
Rumor has it the arrest is yet another conspiracy against Trump, the Trump-Xi Trade Truce to be precise.
To most U.S. citizens, this is rather meaningless news, but in China there has been a massive explosion of outrage. The Chinese are demanding her immediate release, and the editor in chief of the Global Times is calling her arrest “a declaration of war”,
Arresting the CFO of China’s tech champion could make Beijing angry for no good reason
Hu Xijin, the editor in chief of the Global Times, described the arrest as a “declaration of war” against China, according to the New York Times. The Global Times is a state-run newspaper whose views are thought to reflect the ruling communist party in China. Hu’s comments were made on Weibo, a Twitter-like service, the New York Times reported.
“Without any solid evidence, the Canadian and US governments trampled on international law by basically ‘kidnapping’ Chinese citizen Meng,” an official with the Chinese Ministry of Commerce said in a Global Times op-ed. “The China-US trade row could become a protracted war.”
Nothing is done or said at the Global Times without the approval of the Communist Party, and if Hu Xijin was out of line he would be immediately fired.
But he wasn’t fired, because he was simply expressing what most Chinese are feeling at this moment. In China, the consensus is that relations between the U.S. and China have “gone nuclear”, and at this point the only thing that is going to soothe things is the immediate release of Meng Wanzhou.
Conspiracy Against Trump-Xi Trade Truce?
Some folks commented there’s no way Trump ordered the arrest. Reason being you don’t negotiate with China by offering them a truce then kidnap one of their highest profile business executives (in a foreign land – Canada). In this case, the daughter of the founder of Huawei, which is the biggest tech company in China. It is also the world’s biggest manufacturer of telecommunications equipment and the second largest cellphone manufacturer in the world (yes, way ahead of Apple).
Kidnapping Meng is a dastardly and devious act that in the current world climate can only be viewed as an attack on Trump’s attempts to negotiate a trade deal with China. There is no other reason anyone in their sane mind would do something like this… And if it really is some major Iran problem, then they would announce that immediately.
The arrest was conducted by the Deep State, so the conspiracy theory goes,
This is conducted those who actually run the government once again announcing to the world that Trump does not run the government. And of course, Trump doesn’t want to come out and say “Actually, I don’t even run my own government, sorry,” so instead he’s forced to just go along with the conspiracy.
Are U.S. & China heading to an all out war beyond trade tariffs?
As a result, US stock futures and Asian shares tumbled after Meng’s arrest. The news came as Washington and Beijing begin three months of negotiations aimed at de-escalating their trade war, which is adding to global investors’ worries over rising US interest rates and other risks to global economic growth.
Fearing that a US-China trade war truce is becoming unattainable, Europe’s main stock indices slumped to their lowest point since December 2016 in morning trading on Thursday. The FTSE 100 fell by 2.5%, while benchmark indices in France, Germany and Italy all lost more than 2%.
On Thursday, the Dow Jones Industrial Average plummeted almost 800 points before roaring back and recovering nearly all of those losses. The Dow closed just 79 points lower for the day, and if you only looked at the final number you would be tempted to believe that there is not much reason for concern. But these wild swings up and down are precisely what we witnessed back in 2008, and they are a sign that the stock market is literally teetering on the precipice of disaster. And it almost certainly would have been a historically bad day for stocks on Thursday if not for a very well-timed article in the Wall Street Journal. Once news broke that the Federal Reserve is considering “a wait-and-see approach to rate hikes”, stock prices immediately began to rebound…
Stocks closed well off their session lows on Thursday after news broke that the Federal Reserve could tighten monetary policy at a slower pace than previously expected.
The Wall Street Journal reported the central bank is considering whether to signal a wait-and-see approach to rate hikes at its upcoming meeting this month. The report said Fed officials do not know what their next move on rates will be after December.
This just shows the immense power that the Federal Reserve possesses.
The Power Of Federal Reserve
The Federal Reserve has far more power over the U.S. economy than anyone else does, and that includes the president of the United States. Just the mere suggestion that the Fed may slow down the pace of rate hikes was enough to send Wall Street into a feeding frenzy. Nothing that President Trump could have possibly said could have had that sort of a positive impact.
And this is a perfect example of how fundamentally flawed our system is. Such phenomenon deeply, deeply offends folks that we have an unelected, unaccountable panel of central bankers setting our interest rates for us. As relentlessly proposed by Ron Paul – To Really ‘Make America Great Again,’ End the Fed!, we need to shut down the Federal Reserve and return to a system where interest rates are determined by the marketplace.
Meanwhile, we just got more evidence that our trade war with China is not going very well at all. Today we learned that the U.S. trade deficit shot up to a 10 year high during the month of October…
The U.S. trade deficit jumped to a 10-year high in October as soybean exports continued to fall and imports of consumer goods rose to a record high, suggesting the Trump administration’s tariff-related measures to shrink the trade gap likely have been ineffective.
The Commerce Department said on Thursday the trade deficit increased 1.7 percent to $55.5 billion, the highest level since October 2008. The trade gap has now widened for a five straight months.
And we also just got more evidence that the U.S. economy is slowing down. Last month, factory orders declined at the fastest pace that we have seen in more than a year,
New orders for U.S.-made goods recorded their biggest drop in more than a year in October and business spending on equipment appeared to be softening, suggesting a slowdown in activity in the manufacturing sector.
Factory goods orders fell 2.1 percent amid a decline in demand for a range of goods, the Commerce Department said on Thursday. That was the largest decrease in orders since July 2017.
Economic conditions really are deteriorating, and our financial markets really are headed for big trouble. Markets – in bonds, homebuilder and tech stocks, and oil, to name a few – are telling us a recession is unavoidable.
“The stock market is signalling a recession is on the horizon, a recession that is man-made, with two back-to-back trading days of heavy losses that has sent investors running for the exits,” said Chris Rupkey, an analyst at MUFG.
But some folks out there still refuse to accept reality. For example, an article that was just posted by USA Today is strongly urging people “to buy the dip”,
If you have the courage, now might be a time to step in to buy stocks when they are beaten down and on sale, says Thorne Perkin, president of Papamarkou Wellner Asset Management.
The worst reaction is to panic and sell, as there’s a good chance you could miss a stock rebound in this environment, he says.
Sadly, a lot of people will take this advice and will watch their retirement savings go up in smoke.
Many economy guru believe we have reached a critical turning point, and things are really starting to heat up. Unfortunately, most people out there still don’t seem to realize what is happening.
Or could it be investor fears about recession’ is simply “overdone”, as commented by IMF Christine Lagarde, “No cause for alarm. I don’t see elements of a recession in short order.”?