Tuesday, July 10, 2018

On Trade war, China and Bear Markets

Less Globalization
The extent of the economic damage depends on how severe restrictions are on trade in goods and services, on labour and capital, says Roubini. Eventually, restrictions in trade, in technology, in information will occur. There is a risk that the world may become slightly less globalised or de-globalised.

Trade conflict could get worse between US and China.   
It is not just the trading of goods but also the jobs and incomes of white- and blue-collar workers that Trump is worried about. In Roubini’s view, the conflicts regarding trade are going to escalate to technology, to intellectual property rights, to foreign investment.

Conflict between China and US could even escalate into more.
It is possible that China may consider the dumping of some of its holdings in US Treasuries. These are the elements of such wars. Tensions between China and US are not just tariffs and trade; they could escalate into so much more.

We could see a real bear market if the trade war gets too severe
If there were a severe trade war in the US with its trading partners – and it becomes a real trade war that escalates with retaliation – at some point, the market reaction is not going to be a correction but a bear market. The impact on business and consumer confidence will be significant, says Dr Roubini.

via TheEdge Singapore