Two days ago, when we commented on the early morning plunge in stocks (which was subsequently fully reversed by the close in a historic 800 point Dow reversal), we said that a long-standing question – will Trump pick plunging stocks or trade war – had finally gotten its answer when CNBC’s Eamon Javers said that a “White House official said the the WH recognizes that Trump’s actions are hitting the stock market, but this is “a longer term thing,” and the president has to follow through on a key campaign promise.”
Moments ago, Trump himself confirmed that when in a radio interview on Friday morning, the president said that U.S. markets could face some “pain’’ from the trade standoff with China and other countries, but – like on Wednesday – asserted that in the long-run, Americans would be better off due to his protectionist actions.
Speaking on WABC Radio’s “Bernie & Sid in the Morning’’ program, Trump said “I’m not saying there won’t be a little pain so we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.’
“We have to do things that other people wouldn’t do. So we may take a hit, but you know what, ultimately we’re going to be much stronger for it,’’ Trump said during the radio interview on Friday. “It’s something we had to do, and ultimately if you take a look it’s not only trade with China – it’s everybody.”
To be sure, stocks have fluctuated dramatically in the past few weeks when Trump drastically intensified trade actions and jawboning against several countries, mostly China. Indicating that he is willing to accept some notable losses in the S&P, Trump said in the interview Friday that “the market’s gone up 40% or 42%.” Which suggests that the president would be ok with a drop of 20% or so if it means winning trade war against China.
Meanwhile, as reported earlier, in response to Trump’s latest tariff announcement, China said it would counter U.S. protectionism “to the end, and at any cost,” as a war of words over Trump’s proposed tariffs on Chinese imports escalated.
“The Chinese side will follow suit to the end and at any cost, and will firmly attack, using new comprehensive countermeasures, to firmly defend the interest of the nation and its people,” the Commerce Ministry said in a statement on its website on Friday.
Finally, recall that China yesterday admitted that “squeezing” the US stock market is perhaps its biggest leverage. It now has a green light from the president himself to do just that…
… and between that, and Trump’s admission that stocks are going lower, it may be time to sit on the sidelines for a while.