Trade Wars Would Wipe Out Tax Cut Benefit For S&P 500 EPS

This headline from Bloomberg’s lead Saturday story pretty much sums it up: “A Horror Week for the Dow Has Investors Begging for Trump Respite”.

That reminds me of something we wrote last Sunday in our week ahead preview. Recall this:

Again, I guess what I would say here is that if something goes “wrong” with all of that and we get too much President Dennison over the course of the week, it could be a toxic brew.

“Too much Dennison.” If you’re looking to place blame for this week, that’s the proximate cause right there. 

Trump will invariably make things worse on Twitter this weekend (he always does), it’s just a matter of which “things” he’ll make worse. As far as the trade wars go, there’s no shortage of new commentary out of China.

“A trade war between the U.S. and China will lead to a total loss of about $400 billion, taking into account the changes to cost of products, prices and supply chain,” Xinhua said on its Weibo account overnight, citing Zhu Min, a former senior official at the PBoC and the IMF. That’s apparently his “personal estimate.”

“The only major nation that seems to want to destabilize the global trading system is the U.S.,” former WTO head Pascal Lamy said, speaking at the China Development Forum in Beijing. “The big question is whether this U.S. tariff carpet bombing is to open a negotiation or destroy the system,” he added, before noting something that is obvious to everyone but the populist/nationalist contingent: “Giving into protectionist pressure will harm us all.”

And then there was a not-so-subtle message from the People’s Daily, where a front-page commentary reads as follows:

A trade war between China and the U.S. will cause the most damage to U.S. multinationals, including Apple Inc., Boeing Co. and Intel Corp., which rake in huge revenue from China every year. Trade war will damage the U.S. economic recovery.