Thread: Dow falls 500 points after Trump advisers simultaneously contradict each other on tra

Dow falls 500 points after Trump advisers simultaneously contradict each other on trade

By Matt Egan, CNN Business
Updated 2:04 PM ET, Fri December 7, 2018

New York (CNN Business)Wall Street does not like the mixed messages coming out of the White House on trade.

The Dow fell 500 points, or 2.1%, on Friday afternoon. The Nasdaq lost 2.6%, while the S&P 500 retreated 2.1%.

Stocks had been trading higher earlier Friday, but the market turned sharply lower following conflicting messages coming out of the Trump administration about trade.

While White House economic adviser Larry Kudlow sounded an optimistic note about China talks on CNBC, trade adviser Peter Navarro was simultaneously warning on CNN of higher tariffs if issues aren't resolved during the 90-day negotiating period.

"We've gotten a hodge-podge of mixed messages from people in the same administration," said Art Hogan, chief market strategist at B. Riley FBR. "We're not sure who we're supposed to listen to."

Worries about the negative consequences of the trade war and hopes for progress have launched Wall Street on a wild ride of late. The US-China ceasefire sent stocks soaring on Monday. But doubts about the truce helped knock the Dow nearly 800 points into the red on Tuesday. And then the Dow plunged 785 points on Thursday before staging a huge comeback.

Senior administration officials have alternated between good-cop and bad-cop on the trade front.

Kudlow told CNBC on Friday that the trade talks with China are "extremely promising."

Kudlow, director of Trump's National Economic Council, said that Trump has indicated he might be willing to extend the 90-day negotiating window if there's "good, solid movement and good action."

Navarro, the trade hawk of the White House, struck a different tone on CNN. Asked whether the administration would walk away if issues with China are not resolved within 90 days, Navarro suggested Trump would "simply raise" existing tariffs on $200 billion worth of Chinese goods.

If China fails to change its ways on trade, "we have a president that's going to stand up to that for once," Navarro said.

Navarro also championed the nearly $12 billion that the United States has raised from tariffs, even though that money is being mostly paid by American consumers and businesses.

The comments didn't lift the uncertainty on Wall Street. Trade-sensitive stocks including Apple (AAPL), Boeing (BA) and Caterpillar (CAT) retreated more than 2%.

"We keep getting conflicting reports out of those guys," said Joe Saluzzi, co-head of trading at Themis Trading. "The markets are confused."

Trump himself has added to the confusion. While Trump has spoken of a desire to make a deal with China, the president also alarmed some investors by calling himself a "Tariff Man" on Twitter on Tuesday. That tweet was blamed for helping to send the market plunging.

Yet on Thursday evening, Trump said on Twitter that he agrees with a recent encouraging statement from China expressing confidence of a trade agreement within 90 days.

"Today is a microcosm of what we've had all week: mixed messages," said Hogan. "Every message has contradicted itself."

Hogan pointed to the confusion over a central issue: when the 90-day clock on negotiations began. At first, Kudlow suggested the period began on January 1. The White House later corrected Kudlow to clarify that 90 days began the date of the dinner, December 1.

The stock market would be down more on Friday if it weren't for a rally in the energy sector. Oil stocks like EOG Resources (EOG) and Anadarko Petroleum (APC) were bid higher after OPEC and its allies reached a deal to significantly cut production. US oil prices spiked 4% on the news.

https://www.cnn.com/2018/12/07/inves...low/index.html

It's not mixed messages or a hodge podge. It's very clear. China's Xi and President Trump have agreed to solve 142 trade issues. How and on what exact terms this will happen will be worked out within the 90 day period that started on December 1. Any agreement between the two leaders is subject to approval by both countries legislative branches, our Congress on a new trade deal and their Communist Party organization. During the 90 days, there is a tariff truce, at the end of the period if there is no final agreement between the two leaders, then Trump raises the existing tariffs and puts tariffs on another $267 billion of Chinese goods. China then does whatever they want to do to the US in response. This is a negotiation to finalize a general framework on these 142 items they have reached tentative agreement on, like every major negotiation.

It's like these Wall Street guys have never negotiated anything before. Gee, maybe they haven't.

Nothing new here. We've been getting the same thing on immigration and border security from the Trump administration. One minute they're saying one thing or telling us of an imminent action and the next minute they're saying something different or changing their minds on something we were told was going to happen.

Yeah, it's like people who haven't been involved in negotiations before don't understand how it works.