What a president says matters. So when Donald Trump brags about an accomplishment, stocks rise. But when investors figure out the truth, markets fall. That’s exactly what happened today. From Bloomberg:
“President Donald Trump turned to a familiar playbook after his high-stakes dinner with Chinese President Xi Jinping on Saturday: boast of a big victory first, and let a more nuanced reality sink in later.
“Trump followed the same script after trade talks with the European Union and Canada and his nuclear summit with North Korea’s Kim Jong Un. His optimistic comments can send markets soaring, before investors realize the president’s claims of success may have been exaggerated.”
Same drill this week when Trump bragged about his successful meeting with Chinese President Xi at the G20 Summit in Argentina.
China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.
— Donald J. Trump (@realDonaldTrump) December 3, 2018
…Only to reverse course soon after calling himself the “Tariff Man.”
….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN
— Donald J. Trump (@realDonaldTrump) December 4, 2018
So, bottom line, no deal on cars. This kind of whipsaw makes investors jittery. And today the NYSE reacted dropping more than 800 points, or 3 percent.
Breaking News: Stocks fell more than 3% as President Trump sowed confusion over a truce in the U.S.-China trade war, and recession fears loomed larger https://t.co/czYpozTGEy
— The New York Times (@nytimes) December 4, 2018
From The Washington Post:
“It’s an incredible deal,” Trump told reporters after the dinner. “It goes down, certainly, if it happens, it goes down as one of the largest deals ever made.”
“He later said China had committed to buying large amounts of U.S. agricultural products and completely removing all tariffs on U.S. automobiles, a huge shift from its current 40 percent penalty. Chinese officials, meanwhile, did not confirm any of these details. They wouldn’t even acknowledge that there was a 90-day deadline under which they were operating.
“Meanwhile, White House National Economic Council Director Larry Kudlow said there wasn’t an actual agreement for China to remove auto tariffs, but that he expected China to eventually do it as a measure of good faith.”