“Trade tension” might be understating what the markets, advisors and consumers might be feeling right now.
This morning saw China retaliate with tariffs on at least $75 billion worth of U.S. goods, including oil, soybeans and cars, to go into effect Sept. 1 and Dec. 15 in lockstep with U.S. tariffs.
President Donald Trump responded to China’s announcement by ordering U.S. companies to stop trading with China.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China,” Trump tweeted.
By lunchtime, the Dow Jones Industrial Average dropped 455 points. But the markets had other events that might have prompted traders to hit “sell.”
Fed Chairman Jerome Powell issued one of his familiarly ambiguous statements at the he Kansas City Fed’s annual symposium in Jackson Hole, Wyo.
“In principle, anything that affects the outlook for employment and inflation could also affect the appropriate stance of monetary policy, and that could include uncertainty about trade policy,” according to Powell’s prepared remarks, which read more like a history lesson. “There are, however, no recent precedents to guide any policy response to the current situation. Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment and public confidence, it cannot provide a settled rulebook for international trade.”
Those two events occurred on a Friday before the G-7 meet on Sunday in France in what is expected to be, frankly, a mess.
But, on the brighter side. The markets have bounced back after numerous shocks recently and over the past few years. And consumer confidence is still reasonably buoyant. So, maybe this is just noise from the new normal?
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Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at firstname.lastname@example.org.
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