Tariffs Taking a Toll on Markets with ‘Rough 2019’ in Store

WASHINGTON – The trade war is creating pain for America’s economy. Exports are declining, jobs are disappearing, and prices are rising for everyday items. Now, the markets are starting to react, and it’s becoming clear that tariffs are starting to take a toll on the underpinnings of the economy. As tariffs continue to hurt American businesses, workers, and families, the message from the markets is clear: the trade war needs to end before things get even worse.

MARKETWATCH: ‘Stock market turns negative amid report that U.S. set to impose tariffs on all remaining Chinese imports.’ “U.S. stocks lost altitude and turned negative Monday afternoon, amid a report from Bloomberg indicating that the U.S. was ready to impose a full-slate of tariffs on China’s imports, intensifying a protracted clash between the world’s largest economies.” (MarketWatch, 10/29/18)

PANTHEON MACROECONOMICS ECONOMIST: Trade war is ‘quickest possible route to a recession’ with ‘stock markets likely to tank as tariffs hit.’ “Ian Shepherdson, chief economist for Pantheon Macroeconomics, estimated the tariffs would constitute a tax hike of about 0.7 percent of GDP, ‘to say nothing of the cost of the disruption to supply chains.’ … ‘With stocks likely to tank as the tariffs hit, even without higher rates, it seems to us that broad, high tariffs on imports are the quickest possible route to a recession next year.’” (Washington Post, 10/30/18)

CRAMER: ‘Higher tariffs and higher interest rates are setting stocks up for a rough 2019’. “President Donald Trump’s tariffs on China and the Federal Reserve’s plans to hike interest rates in lockstep are both ‘toxic’ for the stock market, and combined, they are souring the prospects for 2019, CNBC’s Jim Cramer warned Monday. ‘Higher rates and higher [tariffs] are setting us up for a very difficult end of the year — not to mention 2019 — unless something’s done to ameliorate these two different houses of pain,’ the ‘Mad Money’ host said. (CNBC, 10/29/18)

  • ‘Mini version of 2008’ could be looming. “The only thing that can stop the market’s recent plunge is the Federal Reserve changing course on interest rates or President Donald Trump ending his tariffs, according to CNBC’s Jim Cramer. ‘My main fear is that we could have a mini version of 2008 if the Fed doesn’t change course,’ the ‘Mad Money’ host said Monday night.” (CNBC, 10/30/18)

TIAA WORLD MARKETS PRESIDENT: Trade developments pose ‘big risk’ for markets. “Investors have feared for most of the year that a protracted trade spat will lead to slower economic growth and diminishing profits for companies. ‘The big risk is still with trade and China,’ said Chris Gaffney, president of world markets at TIAA Bank, noting the market has not fully priced in the possibility of a protracted trade war with China.” (CNBC, 10/31/18)

CNBC: Rough October sends investors to safer assets amid trade fears. “Investors pulled away from the stocks that have delivered the best returns in recent years, as concerns about President Trump’s trade war and rising interest rates sent fund managers into assets that are perceived as safer should the economy turn.” (CNBC, 10/31/18)

AXIOS: Forecasts are all over the map — but recession is a common theme. Mark Yusko, founder of hedge fund Morgan Creek Capital, forecasts recession next year, and puts the odds at 100% — thanks to trade tensions. “The trade rhetoric is one of the dumbest things in the history of all administrations and it will cause a global recession,” Yusko told a recent investment conference. (Axios AM, 11/2/18)

 

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