October 17, 2019 02:48 PM RSS

Risks of an Even Greater U.S. and World Stock Market Meltdown

  • Wall Street Rebel | James DiGeorgia
  • 11/12/2018 5:23 PM
Risks of an Even Greater U.S. and World Stock Market Meltdown

Today’s 602 point nose-dive in the Dow Jones may be just the beginning if the trade war with China isn’t ended soon.  

 

By James DiGeorgia

We at WallStreetRebel.com have been warning that if President Trump continues to wage his trade war against China, the U.S. stock market could suffer a catastrophic meltdown.  Now stock market analysts across the spectrum are echoing our concerns, for example…

The Chief Investment Officer Katie Nixon of Northern Trust Wealth Management during an appearance on FOX Business’ “Mornings with Maria” on Monday warned about Trump’s trade war against China .

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This (Chinese trade war) is very much an overhang to the market. It’s an overhang to risk sentiment… Probably one of the biggest risks in the market right now is that we don’t get some deal by the end of the year or oonnd  thereafter, or at least a deal to make a deal.”

Chinese President Xi Jinping vowed last week to increase China’s imports, lower trade barriers and build up protection of intellectual property rights but has yet to try to come to the negotiating table to work a new trade deal with President Trump. If there’s going to be any meeting that makes a difference, it's not likely to happen before the November 30, 2018, G20 meeting. Meanwhile, company after company here in the U.S. during third-quarter earnings calls are citing the uncertainty around trade and tariffs as potentially impacting their ability to spend on capital spending and warning that their earnings forward could be affected negatively.

The S&P 500 has much more exposure to the trade and tariff situation with China, because of the existing supply chains. Vice President Mike Pence arrived in Tokyo on Monday, and will likely discuss the trade dispute with China as he begins a week-long tour of Asia.

This comes on the heels of Secretary of State Mike Pompeo and Defense Secretary James Mattis meeting last week with their Chinese counterparts but not on trade, instead of on sensitive military operations taking place in the South China Sea.

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Today’s 600 point decline in the Dow Jones, 54 point decline in the S&P and more than 200 points plummet in the NASDAQ was of particular concern thanks to the fact there was no rally back after 2 pm which has occurred during most recent sell-offs. Instead, the market just keeps falling through to today’s close.

“That was a miserable close,” said Wall Street Rebel’s Chief Market Analyst Geoff Garbacz. When the market just keeps going further south into a close like this, it’s an indication that the selling may not be anywhere near a rebound.

“The weight of the United States’ trade war against China and many of its other trading partners along with a rising interest rate environment has now has created what could become the “Black Swan” an event that creates a great deal of concern.


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