China China China
by Martin on December 4, 2019

China Trade Can Be Much Less In Value

China’s trade war is one of the most expanded topics. it is no surprise as the US-China trade war has affected almost every sector and has affected the prices as well. This means that rates have changed drastically due to the ongoing political situation.

different spheres have suffered and experienced inflation and instability because of Chinese trades. Although many people find it concerning and they consider that certain steps should be taken in order to avoid the further chaos caused by the political state affecting financial sector, there still remain some people who on the opposite think that the situation is overestimated and generally too much importance is given to the Chinese trading.

Trade War Overestimated

Jimmy Cramer who is an American television personality, former hedge fund manager, and best-selling author. Cramer is the host of CNBC’s Mad Money and a co-founder of TheStreet.com has discussed the issue on his show this Tuesday. He addressed the most important topic for now and fixed his unpopular opinion.

“If the trade war were really all-important, the averages would never have been able to surge to record levels over and over and over again,” CNBC’s Jim Cramer says in the wake of a trade-related market sell-off.

“As tense as the negotiations may be, China’s simply a much smaller issue than most people seem to realize,” the “Mad Money” host says.

“The market is slow to figure out the positives, very fast to identify any negatives from the trade war, which is why we have days like today,” he says.

The arguments standing behind his position seem to be very much valid. Jimmy Cramer offered some advice that could be shooting for investors after the stock market sold off on doubts that the US and China would soon land a trade agreement. Well, we all better keep our expectations low, so at least we do not get disappointed when something does not happen the way we want it to happen. Or if something happens the way we want it to happen we will be twice more excited about it.

“If the trade war were really all-important, the averages would never have been able to surge to record levels over and over and over again,” the “Mad Money” host said. “As tense as the negotiations may be, China’s simply a much smaller issue than most people seem to realize.”

What Lies Beneath

President Donald Trump is very much known for his unpredictable characteristics. It was earlier that day when he said that he was willing to postpone signing a trade deal with Beijing until the 2020 elections. This has been a strong hit for the ones who have sold off stakes in the stock market.

The major averages all tanked more than 1.4% to their session lows before recovering some of those losses. The Dow Jones Industrial Average finished the trading day at 27,502.81, down about 280.23 points, while the S&P 500 traded 0.66% lower and the Nasdaq Composite settled 0.55% under.

“The market is slow to figure out the positives, very fast to identify any negatives from the trade war, which is why we have days like today,” Cramer said. “Unfortunately, I think we could have a lot more faux … trade-related pain before we’re ready for some gain.”

Cramer seems to be extremely confident in his own words and encourages investors to think somewhere outside the box of trades. He definitely wants to highlight some of the remaining bright aspects of the market. He also outlined several reasons to further support his argument.

  • The U.S. economy is largely service-oriented and is “pretty darned close to full employment.”
  • There are some of the sectors that are no how affected by the trade war between the US and Chine. Those sectors are one of the major operating in the country. Those are “power secular trends” of digitalization and medical innovation.
  • Tariffs cause bond prices to go up and yields to go down. This might not sound promising but it means that more investments into high-divided stocks are expected.
  • Retailers that have a scale, have the ability to push suppliers to keep prices down, in order not to affect the society too much.
  • The indexes are less reliant on industrial stocks, which means “tariffs can’t hurt us as badly as you might think.”

The strategy of waiting and seeing is the best option for now. This approach should be taken over by the investors as technology companies such as Apple are still leveraged to China’s economy. Eventually, the stocks that are detached from China will rebound.

“Nevertheless, much of tech keeps getting slammed, and that’s the real issue we have to face right now,” Cramer said. “While I think that will eventually create fabulous discounts, we’re not totally there yet.”

What can be told for sure right now is that – The Time Will Show Us.

By Martin

Martin has been a Trader for 5 years now. He has experience in trading Forex, stocks, and cryptocurrencies. Aside from his trading career, he also worked for a UK news outlet as a web article writer and interviewer for 3 years. His insight on news and brokers have been refining for the past 4 years.

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