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Home / Business / China trade dispute draws on; Trump still plays with the bank's money

China trade dispute draws on; Trump still plays with the bank's money



President Donald Trump speaks at the 38th Annual National Peace Officers Memorial Service on Capitol Hill, Washington, May 15, 2019.

Carlos Barria | Reuters

When it comes to his position in the US-China trade conference, President Donald Trump still plays the role of a riverboat gambler on a hot strip.

Almost a year ago, Trump was pressured during a CNBC interview, explaining its aggressive tariff strategy both to China and other partners around the world. The S&P 500 was up by almost 5% for the year after the show on July 20, and the big capital index had risen 31

% since the election in 2016.

"This is the time. You know the phrase," We play with the bank's money, " he said.

The term is actually "playing with the house money" and is a gambling metaphor for someone who bets on their winnings and thus does not have so much to lose. [19659002] Some ten months later, and the president's gambit is still backed by a solid stock market that has achieved about 42% since the election and an economy that gives him leeway to continue pushing the case to a more hunting level.

"There are housing money here. The market [U.S.] is almost full-time, interest rates are low with very little inflation, and the whole world is investing in the US as safe-haven equity trading, says Michael Yoshikami. , CEO and founder of destination wealth management. "So it's a pretty strong position to be in."

& # 39; Their own version of the financial crisis

Yoshikami's company is based in San Francisco, and he often travels to China to meet customers.

What he has seen over the past year is a nation on the edge, worried about the growth potential that it is switching from an export-driven economy to one that has better balance due to stronger consumption. With that background, Trump seems to have plenty of chips and a strong hand to play.

Still, nerves are jangled on Wall Street. Market participants are worried that escalation in the tit-for-tat tariff may damage business and consumer confidence and slow down.

But Yoshikami claims that China has more to sweat than the US

"China really needs an economy has a real problem," he says. "If you talk to people in China, it goes down and the population knows it." 19659002] Actually released data Wednesday showed that sales growth in China hit a 16-year low and industrial output was well below consensus estimates, GDP growth is about half that which was below peak and property prices fell.

"What people fail to realize is what happens in the trading situation is their own version of the financial crisis we had in 2008, "said Yoshikami." The president knows it. "

Playing the Fed Ace

But what Yoshikami thinks might be the real ace in the hole for the US , the Federal Reserve, which has put political changes on hold for the rest of the year., Traders, in fact, see a strong chance that the central bank will cut its reference price before 2019 is up.

"It's actually the house money being spent , "he said." Although There is a lot of drama going on with China, the administration figures show that they always have the Federal Reserve, as well as the bullying column, to stabilize the market. "

In detail, investors are on the verge that the continued saber rattling is destabilizing.

As tensions have hit the last week, investors have drawn nearly $ 7 billion from the SPDR S & P 500 Trust, the most popular ETF to play the big-money index. Equity ETFs and mutual funds have seen $ 116 billion in expiry in 2019, although the big gains have been seen, according to Bank of America Merrill Lynch

"He risks pushing this too hard," said Mitchell Goldberg, president of ClientFirst Strategy . of Trump's trading position. "This whole fight is about long-term gain for short-term pain. Trump has it on his side."

Goldberg does not understand any panic among his clientele, but he does not see much interest in adding to existing allocations.

"The money in the market is there," he said. "But there is new money that doesn't come off the sidelines."


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