12-29-2016, 12:40 PM
First we had another article out, exactly on the topic of possible trade frictions between the US and China
- Since China is considerably more dependent upon the US market, at first sight, it looks like the US is in a strong position versus China to deal with trade frictions.
- However, there is an obvious way China can hit back on any US-imposed import tariffs, stop defending its currency and let it float.
- In the end, protectionism is likely to make everybody worse off.
Trump Vs. China, Round One - SPDR S&P 500 Trust ETF (NYSEARCA:SPY) | Seeking Alpha
And the following is REALLY worrying,.
Icahn: I'm concerned about the market in the short term Thursday, 22 Dec 2016 | 12:41 PM ET | 01:12 Billionaire Carl Icahn shared his views in a wide-ranging interview Thursday with CNBC's Scott Wapner on topics such as government regulation, the economy, ETFs and his new Donald Trump administration advisory role on regulation. But the most important thing may not be what the investor said explicitly, but what he implied about the market risk of a trade war with China under Trump. "If you have a trade war with China, by definition, I remember the days something like that would really knock the hell out of the market, but maybe if you're going to do it, you should get it over with, right? So that's a consideration, you have to just make up your mind, if that's what you're going to do, you go do it," Icahn said. Most telling is how Icahn ended the interview, unprompted. "If you're asking me am I concerned about the market on the short term. Yeah I'm concerned about it," he said. "You can look at so many factors here that you have to worry about. Obviously, if you get into a trade war with China, sooner or later, I think we're going to have to come to grips with that, maybe it's better to do it sooner, but that's not my decision at all. I don't get involved with that."
The most important thing from Carl Icahn's 40-minute CNBC interview
The dollar is widely expected to be a big winner in the new year, based on better U.S. growth and higher interest rates. But the course of the dollar could also be shaped by what are now policy wild cards. President-elect Donald Trump's trade plans are one of those unknowns. He has said he would renegotiate trade agreements, and he's talked about tax penalties. Trump has also named an outspoken critic of China, Peter Navarro, to a key trade role. One controversial congressional proposal — a border-adjusted tax, which would tax imports — is expected to end up as part of the corporate tax debate. It's already getting a lot of attention in the foreign exchange market, where it is viewed as having a wide range of potential outcomes, either as a factor that could boost the dollar to double-digit gains, or even send it lower.
This Trump wild card could squash 2017's big dollar rally