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Stock Market Woes Worsen As Trade War Worries Grow

The Dow Jones has lost 500 points since President Donald Trump launched his trade war.

Wang Ying Xinhua News Agency/NewscomWang Ying Xinhua News Agency/NewscomIt was another brutal day for Wall Street, with the Dow Jones Industrial Average falling more than 550 points on Tuesday after losing more than 400 points on Monday.

Similar sell-offs in other major indices caused the S&P 500 to drop 1.8 percent on Tuesday (following losses of 1.7 percent on Monday). Both the Dow and the S&P are now in negative territory for the year. The Nasdaq Composite, which includes mostly tech-oriented stocks, is still barely above water for the year as a whole, but has lost nearly 15 percent of its value since October 3 and is down about 9 percent since November 7.

Worse may be on the way. More than half of the chief financial officers included in a periodic survey by CNBC say they expect the Dow to drop below 23,000 points—as of Tuesday afternoon, it was sitting at 24,500 points—before it stabilizes. That would wipe out not only all the gains from 2018, but would represent the lowest point for the major industrial index since October 2017.

Failure may be an orphan, but this stock market correction seems like it's being raised by a village. Tech stocks are getting hammered, the financial benefits of last year's tax cut are waning, the national debt is again closing in on the $1 trillion threshold (and corporate debt is creeping into record territory too), and the Federal Reserve keeps making noise about raising interest rates—a move that would marginally advantage savings rather than investing and could also slow growth.

And then there's the trade war. Many executives seem to believe President Donald Trump's tariffs and the threat of an ongoing economic dispute between the U.S. and China are the single biggest concern facing the nation's economy in the coming months. In that same CNBC survey, 35 percent of chief financial officers said the trade war was their top concern for the fourth quarter of 2018.

The Trump administration has already imposed tariffs on $250 billion of Chinese imports, and many of those tariffs are set to increase from 10 percent to 25 percent at the start of 2019. Meanwhile, other tariffs on steel and aluminum are continuing to hurt American manufacturers and automakers, and the White House's threat of imposing more tariffs on additional Chinese-made items and foreign cars hangs over the economy as the year comes to a close.

Pessimism about the White House's trade policy has been growing for a while, but it may have finally spilled over into the stock market in a big way. Though you could argue about the causal link, the sell-offs on Monday and Tuesday—coming less than 48 hours after Vice President Mike Pence delivered a firey speech promising a protracted trade war with China—seems like some kind of sign.

Indeed, the signs have been there for a while. In August, a Reuters poll of more than 100 economists revealed that most of them expect economic growth to slow over the next two quarters as the boost created by last year's tax cuts fades and Americans begin to feel the costs of the tariffs. Around the same time, members of the Federal Reserve warned that further escalation of the trade war could have "consequential downside risk" to the economy.

This is a particularly acute problem for tech companies—and, as luck would have it, tech companies had been driving the recent bull market. The so-called FAANG stocks (Facebook, Amazon, Apple, Netflix, and Alphabet, which owns Google) have found themselves on the vangard of the downward charge, with each down at least 20 percent from their 52-week high.

Apple's decline has been particularly noteworthy. As The Wall Street Journal noted Tuesday, demand for the new iPhone has been slower than expected, with consumers apparently unwilling to pay higher prices. Depending on the model, new iPhones cost somewhere between $750 and $1,000—an increase of about 10 percent to 15 percern from similar models introduced in 2016.

As the Journal's Justin Lahart writes, Apple's experience is instructive. While smart phones are not yet subject to tariffs, the cost increases forced by Trump's trade policy forces businesses to choose between raising prices (and losing customers) or cutting profit margins. Either way, investors get the shaft.

That's why, at the end of the third quarter, dozens of major American companies said trade issues and tariffs were red flags for future earnings. Tariffs are taxes, after all, and it was only a matter of time before a major tax increase on imports would trickle down to higher production costs, lackluster earnings reports, and deflating stock prices.

Look back further and it appears that the stock market was warning us about the consequences of tariffs almost from the day that Trump announced that he would slap new import taxes on steel and aluminum. At noon on March 1, when Trump announced his plans to start a trade war, the Dow Jones was at 24,950.

Despite peaking at 26,700 in mid-summer, the story on the stock market for the past nine months has been one of volatility and growing worry.

The Dow tipped below the 24,950 mark on Monday morning. By today's closing bell, it was down to 24,465 points. Trump's trade war is now officially in bear territory.

Photo Credit: Wang Ying Xinhua News Agency/Newscom

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  • Juice||

    You would think the corporate income tax cuts would more than make up for the effects of the tariffs. The income tax cuts apply to everyone. The tariffs affect some companies directly, but the effects are mostly indirect for everyone else. Has anyone determined this quantitatively?

  • Live Free Or Diet||

    I follow such things and there's nothing I'm aware of. The calculations would be immensely complex, especially as the strength of interactions are in some dispute, even among economists of the Austrian and Chicago schools of thought.

    A lot of the market punishment right now is psychological. It makes no sense whatever for Home Depot, which last week reported stronger-than-expected earnings to see a price drop, especially as their business model has been extremely strong for years. United Dominion Realty even got punished today too, in spite of three decades of 12% growth plus a nice 3% dividend. Does anyone believe luxury apartments are going away with all these baby boom retirees?

    No, stocks are on sale. This is the time to sew. Time to reap comes again later.

  • TangoDelta||

    Agreed, stocks are definitely on sale but that doesn't mean they won't get cheaper. The trick is to hedge and buy some now without going all in and retaining some cash to potentially buy more should the price go lower. If your portfolio is broad and diverse enough then rebalancing can go a long way to achieving the same thing. The really big thing is if you're getting a dividend that's over 2% you're still beating the majority of cash accounts.

    That said, HD is suffering from the same thing that the general real estate market has - interest rates. Sure, as the rates go up more people decide to update what they've got rather than buy bigger but at the same time, it suppresses home improvement loans which have been driving a lot of HD's success for the last few years and the perception is that the current depression in builder sentiment will carry over to home owners looking for equity loans for that kitchen remodel.

    In the end, I see companies working around the latest batch of tariffs in similar ways they worked around the chicken tariff. It's going to make for some creative destruction, or not.

  • loveconstitution1789||

    Yup. Good strategies for stocks.

  • Jerryskids||

    Obama was worse, Hillary would have been much worse, what about the jobs, owning the libs, it's just a flesh wound, if you want to make an omelet you have to break a few eggs, we have neither free trade nor fair trade, Trump's a genius, you're a moron, TDS.

    That about cover it?

  • John||

    Correlation doesn't equal causation. There is not a single piece of evidence here that says the stock market isn't going through a normal correction and that this is the result of the dreaded TRADE WAR.

    That is really all that needs to be said.

  • Juice||

    I think it has more to do with rising interest rates than anything else. When interest rates rise, margin is more expensive and bonds are more attractive. Money flows out of the stock market into other places. And then at certain critical levels, selling begets more selling. It's that simple.

  • John||

    I think you are right about that. And if it is true, it is a healthy thing. Interest rates have been artificially low for too long and money artificially put in stocks over bonds as a result.

  • Ordinary Person||

    That's a great message for you Republicans: We wrecked your 401k and you get to pay higher interest rate on your credit card debt.

  • loveconstitution1789||

    Stocks will correct some more and then go back up. Probably starting in January 2019 after the Christmas Holiday season.

    Buy buy buy.

  • vek||

    We've also just been overdue for a recession... And the stock market is way over valued by most fundamentals... Drunken euphoria can only get you so far! Somehow people forget this lesson every time there's a bull market, but it always swings back around eventually.

  • loveconstitution1789||

    4th Quarters are big for retail and we just had an election. 2018 has been an up and down market year compared to 2017 which was steady up.

    There is money to be made.

  • vek||

    I'm not saying we're in for Great Recession V. 2.0 right around the corner... But the stock market is overvalued by traditional fundamentals. Unless we're entering a new paradigm where people will perpetually over pay for stocks from here until judgement day, it's going to have to come back down at some points. Or stay flat at least while profit levels increase and bring values back in line with fundamentals.

  • loveconstitution1789||

    Agree with overpriced stocks.

    Market will correct someday soon.

    Much of the market is bought and sold in chunks and many stocks dont get sold when high. The investement companies just hold the stocks. In long term investing, it really doesnt matter what stocks do every quarter or every year.

  • Remember to keep it all polit||

    You and lc1789 assured us over and over that the rising stock market was proof that Trump was a genius, that the trade war was helping the economy.

    You will deny it, so will lc1789. But the Shadow Knows, and so does your adoring public.

  • Nardz||

    What are the numbers since Trump won the election?

    Something like +6500, no?

  • Remember to keep it all polit||

    You're saying that 6500 gain is due to Trump, as proof of what? That John and lc1789 haven't bragged on that? That the recent drops are not Trump's fault? What?

    Join the John and lc1789 club.

    Morons the lot.

  • Azathoth!!||

    Let's look at 'moronic', shall we?

    You're saying that 6500 gain is due to Trump, as proof of what? That John and lc1789 haven't bragged on that? That the recent drops are not Trump's fault? What?

    Join the John and lc1789 club.

    Morons the lot.

    You are here, blaming Trump for the drop, while taking umbrage that others are giving him credit for the jump.

    If he's responsible for the drop, he's responsible for the jump. You can't have it both ways.

  • loveconstitution1789||

    Lefties want it both ways.

    Trump is bad, so economic gains have nothing to do with him. The economic decreases are his fault though.

  • loveconstitution1789||

    The DOW Jones is up from 19,827 to 24,585 since Trump was elected.

  • vek||

    The rise in the stock market WAS because of Trump... But that doesn't mean the stock market should have gone up as much as it did. Tax cuts and deregulation were valid reasons to push it up... But not as much as it did, especially given that it was more or less already overvalued BEFORE the run up. It never ceases to amaze me how stupid even large scale investors are. These things are SO easy to read it's ridiculous.

    There's a reason that Buffett is the worlds most successful investor, and it's not because he makes idiotic day trades, or wildly gyrates on the values he ascribes to companies based on short term market conditions...

  • Echospinner||

    I agree. Buy great companies.

  • TangoDelta||

    Oh, make no mistake, there is a TRADE WAR. The spark in the shadows is that shale oil is directly on the front line. You see, China doesn't have the fuel resources that has the US with a slight leg up at a time when China seems to be slowing. The telling part is Trump's comment that oil is still too expensive which indicates that the shale boys have made progress in the last few years and will be profitable at even lower oil prices. Sure it might hurt the oil equipment industry but it's likely a larger kick in the groin to China and my take is that Trump's tariff's are actually aimed directly at China's energy supply and not their metal production which is highly energy intensive. My question is what is it trying to push China's energy resources to because that could present a very interesting investing opportunity.

  • TangoDelta||

    I'm just going to apologize for the potential kicking that my previous vocabulary and or punctuation may have taken to my consumption of at least one Moscow Mule, or more. Needless to say, at this moment in time I won't be correcting anyting any thing.

  • loveconstitution1789||

    Without that edit button, we are at the mercy of getting good comments out with some quick typing errors.

  • Juice||

    Obama was worse, Hillary would have been much worse

    True.

  • Mr. JD||

    Most of those things are true.

  • John||

    Apple's decline has been particularly noteworthy. As The Wall Street Journal noted Tuesday, demand for the new iPhone has been slower than expected, with consumers apparently unwilling to pay higher prices. Depending on the model, new iPhones cost somewhere between $750 and $1,000—an increase of about 10 percent to 15 percern from similar models introduced in 2016.

    As the Journal's Justin Lahart writes, Apple's experience is instructive. While smart phones are not yet subject to tariffs, the cost increases forced by Trump's trade policy forces businesses to choose between raising prices (and losing customers) or cutting profit margins. Either way, investors get the shaft.

    So the product isn't subject to tarriffs but it is somehow instructive of the effects of tarriffs? That is a complete non sequiter.

    And from that Bloomberg link

    To get a sense of how the new duties on imports are affecting the economy, we're compiling the experiences and forecasts of companies around the world. Tariffs are affecting businesses big and small, but to keep it simple we're focusing here on a representative group of large, widely recognizable companies.

    The cherry picked a few companies for the purpose of finding what they wanted. Real convincing.

  • Sometimes a Great Notion||

    What was the price of a 6" 30 gauge adjustable elbow before the tariffs and now after? It hurts my company and my company isn't on the stock exchanges. We do buy things though like iphones for our workforce, you know what I am not doing right now - buying new Iphones. I guess they have to make that up from all sales from steel manufactures but the last time I looked there are a shit more construction workers then steel manufacturers. That's all I need to know. The rest is all macro-economic bullshit to me.

    Answer by the way $1.05 to $1.26. Bonus - Over 11K ordered last year so just for this one piece of metal that don't about to shit is costing me over $2,000.00 because of the tariffs.

  • Mcgoo95||

    So you don't think a trade war with China affects costs/production of Apple products, which are entirely (nearly) made in China? If nothing else, China has the USA's most valuable company in a uniquely vulnerable position. The uncertainty in this alone should give us pause in escalating this foolish war.

  • JoeBlow123||

    THIS IS WHY THESE JACKASS COMPANIES NEVER SHOULD HAVE SOLD OUT TO COMMUNISTS TO BEGIN WITH.

    Seriously, fuck Apple and fuck China. I see no reason to kowtow to fucking Chinese communists and their water bearerers in the tech industry that are so busy to either:

    a) Continue to make their shit their (Apple) so they can sell it in America
    b) Continue to beg and plead for market access (Google)

    All the morally bankrupt, unpatriotic fucks in charge of the big tech companies can fuck off. They are some of the slimest pieces of shit, listening to preening of Google executives about diversity and fairness and the moral righteousness of not working for the Pentagon while they work on projects to censor the internet for pieces of trash Chinese Politburo.

  • Mcgoo95||

    Yea well once you put your anti-communist boner to rest, then realize that Apple is largely a symbol of the US. If it falls, nothing will prevent it from dragging the rest of us down with it, most likely. It's easy to say "Fuck the Chinese"..until it happens and then they tell us to Fuck off too. But why should you give a flying fuck if the whole thing goes down the shitter? Better to have some stupid vision about America being a manufacturing powerhouse like we were in 1950. News flash....we aren't, and haven't been for a long time. Unfortunately, our society doesn't value skilled labor/art like we once did. It's gonna be painful to go backwards at this point.

  • JoeBlow123||

    China is run by totalitarian trash. It is time to call a spade a spade and stop pretending they are anything other than that, totalitarian trash. I would think things like that should matter to the country that almost single handedly brought democracy to the globe, but Americans are unable to recognize the slowly tightening noose over their necks being placed there by commies from Beijing. It tightens only ever so slightly, Beijing is in no rush and we have short attention spans, hard for us to care enough to notice.

    The sooner we separate ourselves from them the better.

  • loveconstitution1789||

    Agree JoeBlow123.

  • Mcgoo95||

    "I would think things like that should matter to the country that almost single handedly brought democracy to the globe,"

    ancient Greece hasn't existed for millennia so no, I don't think it matters to them.

  • vek||

    But here's the funny thing:

    IIRC the extra cost of ASSEMBLING the iPhone in the USA would be, 20 something bucks wasn't it? According to all the hoop la articles from some months back.

    Funny thing is, I was just reading an article last night in the NYTs of all places, and most of the iPhone parts aren't even made in China. Many are made in the USA, Europe, and advanced Asian nations like Japan/Taiwan/Korea.

    In short, as with many of the arguments about ZOMG we can't possibly make things here! It's BS. It's not like we're GOING to go full bore back to 50s levels of employment in manufacturing... But if we did have to, we'd still be doing fine. Many products made overseas only end up saving 10-20% on costs vs making them here, after shipping and logistics costs. So it wouldn't be the end of the world.

    Not to mention the USA has LITERALLY the worst manufacturing sector of any advanced economy. Japan and Germany have double the percentage of their workforce working in manufacturing, and they're not backwards countries. Outsourcing is fine... But so is making things. I think we went further than we should have one direction, and correcting back a bit the other won't be a bad thing.

  • Mcgoo95||

    Maybe if they had started at the same time, the added cost to make the iPhone domestically might be $20 + 10% but there is no way that is reflective of reality. Apple products are made by Foxcon which employs 1.3 million people that are highly skilled laborers and is the fourth largest technology corporation in the world. To replicate something that is even close to that efficient here would be a massive undertaking and would require an overhaul of our education system, corporate value structure and society. It can happen but it will be decades before we can achieve what China has done/is doing. Personally, I would like to see it happen but moving in that direction requires a long term vision ......which is why it won't happen. We are far too short-sighted. Apple has no hope to make it's products domestically in the volumes and quality required today. They are over a barrel, at the moment.

  • Mcgoo95||

    And, I might add, they are not the only ones. Nearly every technology company has a similar symbiotic relationship with Chinese/foreign manufacturing technology companies. You really have to admire a company like Tesla for domestically producing it's product.... but I'm sure the other nationalistic dipshits in this converstion are opposed to Tesla because gasoline cars are part of 'merica! Trump's foolish trade war is one he can't win....he's just too stupid to realize that.

  • soldiermedic76||

    No we are opposed to Musk because he is a con artist he only makes money because he is good at getting government subsidies.

  • Mcgoo95||

    Yea and that is completely different than the billions in subsidies that go to agriculture, coal, oil, etc etc. At least he's paid off his govt debt and the alternative fuel tax rebate is also going away leaving Tesla completely self sustaining at this point in time....which is far more than can be said for the aforementioned industries. It's funny that people who claim to be fiscally conservative and socially progressive can't even acknowledge this simple fact. Probably because people that think like you are really Republicans pretending to be Libertarians.

  • vek||

    Mcgoo, you're kind of right, and kind of wrong IMO.

    For one, we don't have to switch to making ANYTHING here that isn't already day one, as far as components go.

    Final assembly of plenty of things could be switched here, and still source components from wherever. Having assembly here though would tilt many commodity items that go into products into being made here though.

    You may not know this, but a few years ago, before they were sold to a Chinese company, Motorola started assembling some of their top of the line smart phones in the USA. They didn't cost anything more than the ones being slapped together in China or Korea... They were some of the highest volume phones on the market at the time.

    It would take time to ramp up to the volume Apple has, but it could be done in short order if we wanted to. A few facilities slapped in the midwest could easily soak up a million employees in a few of the major metro areas. Cost of living is cheap, wages are cheap, and a lot of semi related skills DO still exist there. Most of the people that work for FoxCon aren't doing high level work, it's mid range at best, and doesn't take 10 years to train somebody... Keeping in mind smartphones BARELY existed 10 years ago.

    We ARE still the largest manufacturer in the world by dollar value you know. It's not like nobody knows how to do anything.

    Yeah, it would be a task, but not an impossible one.

  • Mcgoo95||

    I agree it's not impossible but the bigger questions is why do it at all? There's nothing to win. It's not as simple as just moving the assembly process here. The number of tooling designers and people with semiconductor fabrication experience in China and the PacRim dwarfs the US. Also, nearly all of the semiconductor components are manufactured in either China or Taiwan. There is a good article I read in Forbes a while back (I believe) that laid out the case for why Apple moving production back to the US would be nearly impossible. If Apple had to it, they could, but it would take years and likely have enormous financial implications on both Apple and the economy in general.

  • vek||

    Actually the US still produced 50% of semiconductors in 2016...

    That's my whole point. 95% of this stuff is defeatist nonsense that doesn't hold up to scrutiny.

    We've lost millions of jobs by shipping work overseas... Yet we have the lowest labor force participation rate in decades. This means we HAVE the millions of people to do the work, but there is no work for them to do.

    This stuff can, and should, be done. The industrialized world has already been winning manufacturing back from Asia even with this slanted market. It's a combination of rising wages there, and better automated making the lower wages less important in the first place.

    This trend will continue either way. But making it a level playing field, instead of one slanted against ourselves, would help the process along.

  • ||

    THIS IS WHY THESE JACKASS COMPANIES NEVER SHOULD HAVE SOLD OUT TO COMMUNISTS TO BEGIN WITH.

    This is also ignoring the fact that Apple themselves is pretty socialistically hell bent in a couple places. Apple routinely sues and takes legal action against smaller retailers and repair shops and they are/were critical in the formative legislation and community development that has brought you present day California and Silicon Valley. Everybody remembers Apple telling the FBI to go fuck themselves when it came to unlocking their product after the San Bernadino shooting because it was a singularly uncharacteristic liberty-hugging moment from a company that spent decades clinging to and extorting from the public education system like dogged parasite.

  • Pro Libertate||

    The market is highly sensitive to the major tech stocks. Dangerously so. That's the real issue. I doubt sudden fear of the trade war is significant, given that it's old news.

    The scary thing is how fragile investing is. Stocks make everyone nervous, real estate is flat-out scary, bond yields still suck, and there's an insane debt. Formerly safe stocks like GE are no longer safe, etc., etc.

  • John||

    The bigger problem is that stock prices seem to have little relationship to the actual health of the companies involved and the stock market little relationship to the overall health of the economy. The stock market seems to be its own echosystem. And that is a real problem since stock prices are supposed to be a signal to investors and the economy of the health of a company or an industry.

  • Bronze Khopesh||

    The Grand Canyon is also it's own echosystem.

  • John||

    The Grand Canyon doesn't serve a vital function in the economy.

  • Mcgoo95||

    It does in Arizona

  • SQRLSY One||

    The Grand Canyon could serve as a landfill for the whole Solar System!!!

    It would NOT, however, be big enough to dispose of all of Trump's Lies... Even the black hole at the center of our galaxy could NOT be powerful enough to dispose of THOSE!!!!

  • Mcgoo95||

    Trump is playing chess at the quantum level, so I believe you are right, or wrong, or in some indeterminate state.

  • Unicorn Abattoir||

    You won't know until you open the box.

  • Mcgoo95||

    Then you run into Heisenberg's uncertainty. We will never know the truth about Trump's lies....or......never know the lies about Trump's truths...or

  • Headache||

    I noticed the stock market drops have occurred since election day. Tax increases, social violence, and demagoguery by democrats produce uncertainty.

  • livelikearefugee||

    Are you saying there is no relationship between a company's anticipated performance and its stock value?

  • John||

    Yes, I am saying that. There can be but there often isn't.

  • Mcgoo95||

    Short-term - yes. Long term -no.

  • John||

    In the long run we are all dead any way. Yes, if the company goes tits up, the stock price will at some point crash. But, that is not exactly how it is supposed to work.

  • Mcgoo95||

    I can't argue with that. What I was trying to say was anticipated short term performance is unpredictable typically. Anticipated long term performance will more reliably predict stock value. This is why day trading is very dangerous. Earnings move the stock on a short-term, but outlook and guidance will move it over a longer period and is what people should pay more attention to in earnings reports. Otherwise you're going to make some terrible decisions.

  • Headache||

    Anticipated earnings is made up by analyst to control the market. Guidance is made up by CEOs and CFOs to control stock prices. Buyers and sellers would be better off if these self-serving seers just shut up.

  • Mcgoo95||

    Totally agree but in reality, that will never happen.

  • vek||

    The problem is that the prices for MANY stocks is currently decoupled from any sensible valuations based on profits, or REALISTIC future profits. I don't remember exact figures, but an article I read a couple months back maybe was saying that Amazon would have to not only maintain, but INCREASE the insane rate of growth they've had, and sustain it EVERY SINGLE YEAR for 20-30 years or some bullshit... Just to actually be worth its current stock price at reasonable multiples of profits. In other words decades of impossible growth is ALREADY factored into the current price, so it shouldn't rise that whole time lest it simply becomes even MORE over valued.

    That is a feat NO company in history has ever maintained, and when one looks at the current size and scale of Amazon, they would literally have to grow to become a company with gross income bigger than any nation on earth other than maybe the USA and China to meet those figures...

    In short, the price is so completely off base from any realistic estimate of even future value, let alone current value, that only a lunatic would think it was valid.

    All the other big tech companies are largely the same, but to lesser degrees. I think Apple is actually semi sanely valued IIRC, but that's only in relative terms. It's major crack smoking on the part of investors, and due for a correction.

  • Mcgoo95||

    I agree with you but this is nothing new. Irrational exuberance has existed for at least the past 20 years and has caused wild swings, bubbles and massive corrections.

  • vek||

    Of course. Irrational stock markets go back a LOT longer than 20 years. They pretty much go back to the beginning of the concept centuries ago. But this is definitely one of the bigger bouts of stupid over valuation when one looks at the fundamentals.

  • Mcgoo95||

    True. However, IMO the evolution of the internet, and the massive new markets it created, tremendously exacerbated a previously small distortion between fundamentals and stock prices. People simply did not know how to value these emerging opportunities....maybe we still don't. Probably we still don't.

  • vek||

    People have somehow lost site of the idea that massive and fast INITIAL growth CANNOT be scaled to infinity. Ford Motor Company EXPLODED into one of the greatest businesses in the world... But nobody expected it to continue that level of growth forever. That's the big flaw with tech IMO. These companies have become worth hundreds of billions, but are priced as if they can continue 30-50% annual growth per year for decades on end... But there isn't enough market in the world for Amazon to be a 30 trillion dollar company or whatever nonsense it would take, ya know?

  • loveconstitution1789||

    If people do not see the GE bankruptcy coming, they should not be in the stock market.

  • Mcgoo95||

    It's possible but not likely. GE has too many assets and plays in too many arenas for bankruptcy to be their best option. It's much more likely that they will re-structure and/or break-off parts of their business. They also have new leadership which good be good or bad. My crystal ball doesn't work as good as yours.

  • loveconstitution1789||

    GE sells off its assets, retard.

    The last time GE was this low ($7.88) was 2009 and 1994. 2009 was the Great Recession that affected all companies and 1994 was the trend toward going up for GE with a high of $58.13

  • Mcgoo95||

    Oh you mean the great recession that only ended last year, like you previously claimed? News flash Einstein, selling assets is not the same, nor an indicator, of impending bankruptcy. But why the fuck should you start using your brain at this point? As you've repeatedly proven, you live in your own world and by your own delusions.

  • loveconstitution1789||

    OMG, you're as dumb as a bag of dicks.

  • Mcgoo95||

    That's rich coming from an actual bag of dicks.

  • loveconstitution1789||

    You spoke your mom today.

    Man, is your mom a bag of dicks. Big bag too.

  • Mcgoo95||

    This is best you can come up with? Sad.

  • Juice||

    The so-called FAANG stocks (Facebook, Amazon, Apple, Netflix, and Alphabet, which owns Google) have found themselves on the vangard of the downward charge, with each down at least 20 percent from their 52-week high.

    While FB and NFLX are still wildly overvalued, I think Amazon has peaked. They've started the Wal Mart tradition of squeezing their suppliers resulting in a huge drop in quality for lots of random items. I don't know about other people, but I usually look for stuff on Amazon first. Lately I've been disappointed in what I find there and the prices, so I don't buy from them and go elsewhere. Our purchases from Amazon seemed to have dropped precipitously. We're also balking at the $120 price tag for Prime. Fuck that shit. $79 was perfect. $99 was the limit. $119 can suck it, so we won't renew. Oh no, we'll have to wait until we need $35 worth of shit for free shipping. Darn.

  • John||

    I have a friend who works as a supplier for Amazon. She literally just goes around and buys shit on sale and makes deals with retailers looking to move product and ships it off to the Amazon warehouse to be sold at a profit. That kind of arbitrage cannot last forever. Sellers and competitors get wise to it.

    I think you are right that Amazon's days of just printing money are coming to an end.

  • Bronze Khopesh||

    There's always going to be arbitrage. Knowledge is always asymmetrical as is the skill/focus/desire in exploiting opportunities.

    So Amazon, as long as it wishes, will always have a market for friends like yours to use.

  • John||

    There will always be arbitrage but Amazon won't remain the only ones doing it. Arbitrage is by its nature short term. Eventually the market figures out what is going on and the opportunity ends.

  • Bronze Khopesh||

    Are we talking just specifically about Amazon or the opportunity for your friend and others to use a platform such as Amazon provides to profitably engage in arbitrage?

  • John||

    I am talking about other platforms and retailers getting in on the arbitrage action that Amazon is currently monopolyzing.

  • Bronze Khopesh||

    There are others.

    Including FedEx.

    Even with FedEx in the mix I would not bet against Amazon because currently no one has the depth and breadth of service that Amazon provides.

    That can change but it's not a trivial task and it's likely to break numerous companies who try. And Amazon has the money to buy up anyone other than FedEx (and maybe even them!) who grabs too much market share.

    Even a weakened Amazon is still stronger than all its competitors combined. So it would take a perfect storm of events to drag Amazon off of the top of the heap in the arb game.

  • Pro Libertate||

    Don't discount the power of Walmart.

  • loveconstitution1789||

    Amazon thought they would put Walmart out of business and they have not even comes close.

    Plus, Walmart has a brick-and-mortar competitor....Target.

  • John||

    If that is the case, then there is another competitor that can solve the problem. It is known as the federal government. Amazon is an unlawful monopoly that needs to be broken up if what you are saying is true.

  • Bronze Khopesh||

    Also we may be looking at different time-frames. I'm looking at five to maybe ten years down the road while you might be looking further.

    Let's give FedEx and Wal-Mart and the others a chance before we start looking into breaking up Amazon.

    We could be in for a huge surprise in the next couple of years. Who knows?

  • Uncle Adolf's Gas and Grill||

    Perhaps, but retail isn't really that profitable for anyone, and Amazon isn't any exception. Where Amazon is making their money is with AWS. That'll print money for some years to come, regardless of what happens to the retail business.

  • loveconstitution1789||

    Amazon is squeezing out small 3rd party sellers too.

    That was their bread and butter. Amazon used those millions of 3rd party sales to negotiate shipping deals.

    Amazon has sent more of its own vans to deliver packages because they see the writing on the wall.

    Amazon is very innovative with seeing trends but it also keeps fucking over people who helped them get so big. That cannot go on forever unless you adopt the carnival strategy of moving from town to town.

  • Pro Libertate||

    They're slipping, no doubt. We'll see how well they hold up. The interesting story is their logistics business.

  • John||

    No more Grand Tour after this year. And a lot of the good documentaries on prime now only come if you pay for a channel.

  • Bronze Khopesh||

    I like the Grand Tour but it doesn't quite have the same raucous, lunatic vibe that Top Gear had.

  • John||

    No. They tried too hard to live up to Top Gear and it lost something. But it is still very good.

  • Bronze Khopesh||

    If a stock goes down in price and is yet still purchased that means the purchaser at least though he gained by it so has there really been a loss in value?

  • John||

    On paper there has. But otherwise, no there has not.

  • loveconstitution1789||

    It does not matter until the stock is sold.

    If you get more than you paid for it, you gain value.

    Stocks that pay dividends can be valuable even if you dont make much off the stock sale. You make money every quarter.

  • Mcgoo95||

    Ah....so that's how the stock market works! Thanks for splanin that.

  • Echospinner||

    ^ that

  • ||

    The trade war has little or nothing to do with this. There are always trade wars.

  • Pro Libertate||

    Trade Wars!
    Give me those Trade Wars!
    Nothing but Trade Wars -
    Don't let them end.
    Ah, Trade Wars!
    If they should bar wars,
    Please let these Trade Wars stay!

  • John||

    You were the best thing that ever happened to Amtrak.

  • Old Mexican - Mostly Harmless||

    Re: Rufus The Monocled,

    --- There are always trade wars. ---

    You're making stuff up just to defend Trumpianomics. Nice! You just won the Trumpista Medal Of Dishonor!

  • ||

    Huh?

    Since the WTO was established it's been one trade dispute after another. But there have been many trade wars in the 20th century - including between Canada and the USA going back to the 1800s.

    And my point is correlating 'trade wars' to stock market performance is a specious game. Go ahead and try and prove that. Because if you can, you're in the wrong industry and should report immediately to your nearest investment firm.

    http://www.visualcapitalist.co.....rade-wars/

    Now instead of hurling unproductive insults why not challenge my assertion with an actual rebuttal?

  • Headache||

    Old Mexican is another progressive that can't let go of rule 4 and 5.

  • Mcgoo95||

    Old mexican farts more brain cells than you were born with....which isn't hard to do.

  • vek||

    It is not incorrect to state that we have been in a perpetual trade war. The thing is we unilaterally stopped shooting back the last few decades, with only a few small exceptions.

    If the massive tariffs on our goods in almost all developing countries, let alone developed ones, isn't proof of this I don't know what is.

    You can say tariffs are bad all you want, and you can say raising them is bad all you want... But you can't ignore that we've been perpetually getting assaulted by foreign tariffs on our goods... Because it's a fact.

  • loveconstitution1789||

    +1000

  • mtrueman||

    Why are lower prices of consumer products something to be celebrated, but lower prices in the stock market met with fear and hysteria? Ron Bailey gives us yet another article about of the wonders of lower prices over in another article. Lower prices in the stock market is only met with the kind of hand-wringing you see here.

  • Old Mexican - Mostly Harmless||

    Re: mtrueman,

    --- but lower prices in the stock market met with fear and hysteria? ---

    Yeah, why should people worry about their savings losing value, right?

    Trumpism. It's funny. And sad.

  • ThomasD||

    Are price and cost the same thing?

    No.

    So why in the world would you call money in the stock market savings?

  • Azathoth!!||

    wow.

    you just called mtrueman a 'trumpist'.

    get help.

  • Mcgoo95||

    He's not paid by Trump like the rest of you shills who get your panties in a bunch when people are critical of your boss? Huh

  • Diane Reynolds (Paul.)||

    Why are lower prices of consumer products something to be celebrated, but lower prices in the stock market met with fear and hysteria?

    Union pensions are heavily invested in stock markets. If there's one thing a libertarian hates to see is a hard workin' union man takin' a hit.

  • Eric L||

    According to pension consultant Towers Watson about 44% of US pension funds are in the stock market. I would not call that 'heavily invested'.

    You can keep your sarcastic simpleton view of libertarians. I am one libertarian who is not against unions as a concept. In practice there can be problems. That's because unions can become corrupt organizations more interested in serving and protecting only their hierarchy and not their members and they can overplay their hand and become part of the problem leading to their own decline.

  • ThomasD||

    Your sarc meter needs recalibrating.

  • Old Mexican - Mostly Harmless||

    The Market got tired of so much winning.

  • Phil Davis||

    Reason is now joining all the other financial pundits to explain away the market. And, as usual, the pundits are wrong. Reason has a vested interest in trade issues and would love to pin the blame on recent market moves on trade by Trump.

    The reason for the move is far more simple. And, that is money flow. Foreigners are pulling cash out of the US market because the Democrats took over The House. The same could be said of the last two years, foreign money came into the US because of Trump's positive business policy, particularly the tax breaks.

    Overseas they are worried about the US economy as a whole because of the preceived threat that democrats will impead, impeach, block, reverse and generally do anything they can to ruin Mr Trump and his accomplishments to set up their 2020 campaign. This is what career politicians do. It's all about them, not the country.

    Foriegn money knows this and for the moment are moving their cash out.

  • ||

    Not only that, whenever there were trade disputes during my time as a stock broker, we never had a board room meeting to discuss the ramifications of these dispute in the stock markets. By the time you do, it's already priced in anyway. Money shifts around but to say 'one' catalyst moves the market is laughable.

    It's just for media to offer a 'simple' and neat explanation is all.

  • Remember to keep it all polit||

    Gosh. Must be fake news. The Trumpistas on here have assured us dumbies over and over that the stock market was proof that there was no trade war. Posts with links to the DJIA, S&P, over and over and over, showing us how dumb we were.

    Must be fake news.

  • chemjeff radical individualist||

    Stock market goes up:
    Proof that Trump's a genius! And if you disagree it's just because you have TDS!

    Stock market goes down:
    It's just a normal correction! It has nothing to do with Trump! And if you disagree it's just because you have TDS!

  • loveconstitution1789||

    Economic illiterates equate stock and the DOW Jones daily gains and slides with news cycles.

  • Mcgoo95||

    "Economic illiterates equate stock and the DOW Jones daily gains and slides with news cycles."

    You are an expert on the subject...so If you say so.

  • Rockabilly||

    Now's the time to buy.

    But Ben & Jerry's is a hold for the holiday season: #Resist is a seller. I've noticed at Stop & Shop you can buy 3 pints for 10.00.

  • Don't look at me!||

    This has NEVER happened before. The stock market has gone up every day since forever until now.

  • loveconstitution1789||

    Typical Reason bullshit.

    The DOW Jones is up almost 5,000 points since Trump took office.

    The DOW is around 24,585 right now, Trump presidency saw a 20% increase in the DOW Jones during less than 2 years.

    Boehm can suck a bag of dicks.

  • Mcgoo95||

    Being an actual bag of dicks, you can only hope so.

  • DirkBelig||

    /Skims article
    /Presses Ctrl+F
    /Search "Democrat"
    /"Phrase not found"

    Gee, the Democrats retake the House promising to gridlock the government with endless warlock hunting to find some way to topple Trump when they're not seeking to raise taxes and slam the regulatory jackboot back down on the free market's throat and usher in single-payer socialized health care and the Dow plummets, but since that doesn't suit Reason's desired narratives of open borders and cheap foreign stuff, it is left out just like every other Democrat-Media Complex hack outfit would omit it.

    History is repeating as the Democrat takeover of Congress in 2006 and Democrat opposition to fiscal accountability set the stage for the Crash of 2007-2008, prompting the fear and panic which allowed the Democrat-Media Complex to sweep the America-loathing Marxist Obama to power. Facts don't matter, truth doesn't matter; only narrative.

    This is why Reason is joining other sellouts of principle like the American CERTAIN Liberties Union as a hollowed-out entity that relies on foggy memories of past integrity squandered in service of globalist serfdom. Just as Bill Kristol is a wholly-owned servant of a Leftist billionaire, it's safe to presume Reason is now parroting another Leftist oligarch's message. Sad.

  • chemjeff radical individualist||

    "If you don't blame the Democrats for everything bad, it must be because you're controlled by a Leftist billionaire!"

  • esteve7||

    he does have a point though. It was crazy Bernie Sanders saying McCain hated the poor when he questioned giving loans to people with bad credit via Fannie May and Freddie Mac

  • loveconstitution1789||

    And Obama's Democrats added trillions to the national debt before leaving DC, what's you point?

    Clinton, Bush, and Obama were horrible presidents along with the Democrats and RINOs in Congress during those periods.

  • Stilgar||

    Stopped reading after:

    the national debt is again closing in on the $1 trillion threshold (and corporate debt is creeping into record territory too), and the Federal Reserve keeps making noise about raising interest rates
  • Rev. Arthur L. Kirkland||

    It appears a Trump Recession likely has begun.

    The virtue of accountability inclines hope that Trump voters are hurt first and most. If they learn something from the process and diminish their gullibility, the long-term benefit could outweight any short-term pain.

  • loveconstitution1789||

    The House belongs to Democrats. Its their fault.

  • Rockabilly||

    Rev. Arthur L. Kirkland, just admit it, taxes and regulations excite your johnson.

  • Rob Misek||

    Why do you put your financial future in the hands of banks and market speculators?

    Is the chance of a little money for nothing worth your liberty?

    Ooh, here comes the next recession.

  • vek||

    IMO, the thing of it is, is that almost ALL stocks have been overvalued. If you look at all the "boring" fundamentals, the market across the board has more or less been overpriced for years.

    Some stocks were way worse than others, like the retarded valuations some of these tech companies got to... But pretty much all of them were over inflated because of low interest rates, and just stupid euphoria that somehow even logical people fall into EVERY SINGLE TIME when we have a bull market.

    I thought Trump was kind of a dumb ass for taking full ownership of the economy and stock market WITHOUT hedging his statements with a "But hey, we're overdue for a recession anyway... So I'm going to do my best to put it off, but they're inevitable, and one will come around sooner or later!"

    Because that's totally the case. We ARE over due, and the market IS over valued. So it was just a question of timing. This trade war stuff is obviously a thing, but I'm pretty sure the income tax cuts have MORE than offset the tariffs. So it's really just the market working out kinks that have to be worked out from low interest rates and bad investments.

    /My 2 cents

  • ShotgunJimbo||

    "I thought Trump was kind of a dumb ass for taking full ownership of the economy and stock market WITHOUT hedging"

    So right. Obama was lucky in a way that he came in after a dip, it was certain to turn around and make him look good.

    Trump is a short-sighted retard in that he put so much weight on the dow. Hedging was the right way to go, not only because he always uses that kind of language on every matter, but because it was the logical thing to do. Anyone could see a correction was coming.

    Honestly when you look at the trend or any graph its the most astounding. What are the O supporters going to say? "The dow went from the toilet to more than 200% increase under the messiah". And the converse? Trump had a 33% increase in the dow WITH the promise of a decent tax cut (which did happen) and then we had a correction?

    2017 had AWESOME returns, no doubt about it. If you weren't making 20% that year, you weren't doing it right. But this year the S&P/DOW are flat, and decreasing. I made a fuckton of money under O's market rally. People vote with their wallet sometimes. If Trump's goes in the toilet for the next year its going to be a rough 2020 for him.

  • ShotgunJimbo||

    The dow went from the toilet to more than 200% increase

    - more than 100% increase, sorry

  • vek||

    I agree pretty much across the board. We'll see how it goes!

  • MJBinAL||

    What a sack of shit.

    The "trade war" is not impacting the stock market. The FED ramping up rates is slowing home starts and everything else and the reasonable result to that is impacting the stock market.

  • loveconstitution1789||

    Exactly. Boehm would never do an indepth analysis of companies impacted by tariffs and what their stocks have been doing and compare those to companies not impacted directly by tariffs.

  • SimonP||

    I'm in the camp of observers who don't understand all of this hyperventilating over bear markets. What are the fundamentals? I don't see anything in this news about missed corporate forecasts, declining consumer confidence, things of that nature. There have been some reports about a softening housing market, and a few high-profile misses, but that's about it. Why does everyone want to talk the market into a downward spiral?

    I agree with those who think that stocks have been overvalued. The sugar high of the tax cuts have passed through the system. That's why Trump and the Repubs wanted to take another hit - they wanted to boost the market again, because apparently for Trump "the economy" is "the stock market." Fed policy is unlikely to be a cause here because tightening rates have been part of the forecast for years now and should be fully priced in. Dems taking the house is not going to meaningfully alter Trump's regulatory agenda, and it's unlikely any major legislation will get through a divided Congress. The only remaining factors to consider are Trump's insane tariffs and trade wars. Why investors should have taken so long to take them seriously, I don't know; but certainly the markets didn't take hits when they were initiated. So it makes sense that perhaps that effect is settling in now.

  • loveconstitution1789||

    Stock Market Woes Worsen As Trade War Worries Grow

    The stock market was at 19,827 on January 20, 2017.

    The DOW Jones is at 24,586 as of 9:33 am Nov. 11, 2018

    Furthermore, stocks took a hit this week and they were mostly tech stocks which really have nothing to do with tariffs.

    Shut up Boehm, you're making a fool of yourself.

  • buybuydandavis||

    Boehm gonna Boehm

    All his "trade war" articles are the same. "Look! Bad thing! Because Trump. Orange Man Bad!"

    His articles might have some persuasive power if he could make the case based on the effects to the economy as a whole, but "trade policy changes have some negative effects and some positive effects" doesn't have the same zing.

  • wagnert in atlanta||

    Stock Market Woes Worsen As Trade War Worries Grow

    Mmhm, mmhm. How much of this drop has come since the Democrats took the House? I can play post hoc, ergo propter hoc too.

  • Azathoth!!||

    This is what happens.

    The house goes Dem and the market halts, wobbles a bit, and then heads slowly down. If the Senate goes Dem it goes faster.

    This year the shithouse rat wing of the dems is all the rage, so this comes as no real surprise.

  • Rockabilly||

    Rev. Arthur L. Kirkland gets sexually aroused by taxing and regulating.

  • loveconstitution1789||

    Kirkland gets extra excited with death camps, executions of dissidents, and Communist re-education camps.

  • Eman||

    And yet btc keeps falling relative to the dollar, at least, too.

  • loveconstitution1789||

    The north korean and chinese govenrments holding BYC need cash to pay tariffs. Hence the sell off. Hahaha

  • Jgalt1975||

    I'm glad to see the Trumpsuckers (and Russian troll loveconstitution1789) all got their talking points about Democratic control of the House being responsible for this.

  • Mcgoo95||

    Indeed. Comrade1789 has his titties all twisted up....again. His boss is disappointed in his performance and is preparing a polonium cocktail for him as we speak. If only we should be so lucky...

  • loveconstitution1789||

    RBG will be replaced soon by Trump. Glorious!

  • Mcgoo95||

    WTF does this have to do with you being a Russian Troll? I've liked the people Trump has picked for SCOTUS so far. Please try to stay on topic, comrade.

  • loveconstitution1789||

    Im glad to see Lefty trolls finally admit that Democrats are at fault for their lying propaganda,

    The market is doing fine. People making momey hands over fists.

  • Mcgoo95||

    You're doing a shitty job of convincing me Comrade1789, but I do find it entertaining. Just so you know, in the USA the people that are elected don't actually take office until January of the following year. Of course I wouldn't expect you to know that so FYI. Also, people are losing money hand over fist unless they had the foresight to sell several months ago when they should have realized that Trump was destroying international commerce and facing an electoral referendum on his performance. How's the weather in Siberia?

  • buybuydandavis||

    "Just so you know, in the USA the people that are elected don't actually take office until January of the following year."

    Just so you know, economic actors with brains don't wait for them to take office before adjusting their plans.

  • loveconstitution1789||

    Maga. Look at this Lefty troll following me around.

  • Mcgoo95||

    Who are you talking to? Your adoring fans?

  • Echospinner||

    Paw patrol is very big among the three year old set.

    So I have learned.

    Ryder is the blue uniformed leader pup.

    Stocks, equity is a nicer term.

    Stock prices went low last few months.

    Anybody else notice that?

  • Newreach||

    I hope everything is fine

  • buybuydandavis||

    "Tech stocks are getting hammered"

    They should be. Much of their profits were based on the internet moratorium on collecting state and local sales tax. 5-10% price advantage versus the brick and mortar. Huge for items with small margins. It's what made Amazon and Google.

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