Two from Barron's. First up, the headliner, October 10:
China’s latest threat to clamp down on exports of rare earths appears to have blindsided President Donald Trump. The Chinese plan “came out of nowhere,” Trump said Friday in a social media post. “Nobody has ever seen anything like this.”
Beijing’s escalation of the trade fight has put the Trump administration on the backfoot at a moment of weakness. China’s actions show that the U.S. is vulnerable to economic pressure, and China has forced the administration to choose between further escalation or a humiliating climbdown.
The stock market’s sharp selloff Friday indicates that investors are bracing for real pain ahead.
The latest tensions kicked off Thursday, when China unveiled new export controls that would require government approval for overseas sales of many products containing rare earths and for some lithium-ion batteries. U.S. and global tech, defense, and automotive firms need those materials, which are difficult to source outside China. The new rules would go into effect Dec. 1.
Trump said on Friday he would respond with by raising China tariffs by an additional 100% on Nov 1. The U.S. currently imposes 55% tariffs on an array of Chinese imports, which were worth $440 billion in 2024.
Before Trump’s announcement, the Nasdaq Composite finished down 820 points on Friday, while the yield on the 10-year Treasury yield declined by a nearly tenth of a percent. A broad dollar index fell more than half a percentage point.
The message is clear: China has the capacity to hurt the tech firms that have led the stock market to recent records.
The Trump administration is in a difficult position. It reopened the trade war earlier in the year with its sharply higher tariffs on Chinese imports in an effort to force China to adopt a more friendly trade posture to the U.S. That fight came to a head in April, when fears of a sudden stop to the global economy caused the Treasury market to seize up. The Trump administration backed down and entered talks with China....
....MUCH MORE, a first-rate overview.
And a bit earlier on the 10th:
It Will Take More Than Trade Wars and Tech Trouble to Sink the Stock Market
The bull market celebrates its third birthday on Sunday—and investors marked the occasion by worrying about an artificial-intelligence bubble and selling stocks on renewed tariff concerns. No matter. There’s a good chance the market gets to celebrate its fourth birthday as well.
Every bull run has its starts and stops, and this past week counted as the latter. The Dow Jones Industrial Average was on track to drop 2.2% for the week, while the S&P 500 index and the technology-heavy Nasdaq Composite were on pace to decline 1.8%.
It was a week that started with concerns about an AI bubble after Advanced Micro Devicesreached a deal with OpenAI to sell AI data-center chips in exchange for a stake in the chip maker, and ended with a slump after President Donald Trump took to Truth Social to say that negotiations with China have turned “hostile.”
But even the slight pullback can’t hide how well the stock market has performed since bottoming on Oct. 12, 2022. The S&P 500 has gained 85% since that day, driven by generally cooling inflation, a Federal Reserve that started lowering interest rates, continued economic growth, and a boom in everything AI. There’s a good chance, too, that the bull market can extend its gains into a fourth year, even if this past week’s decline marks the beginning of a mild correction.
“A period of consolidation would not come as a surprise after such a strong recent run, but we believe the equity rally is underpinned by solid fundamentals that should continue to support the market,” writes Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
Those fundamentals will be on full display this coming week when earnings season kicks off with reports from big banks, including JPMorgan Chase, Citigroup, and Goldman Sachs Group on Tuesday....
....MUCH MORE
I don't think we get to the fourth anniversary but for now we are still riding the bubble.
And as noted in the intro to July 2025's "Economist Nouriel Roubini sees a ‘mini stagflationary shock’ coming in the second half of 2025"
The next downturn is not "the big one" but it may well be the one before the big one.
October 10 - "Trump to Hit China With Additional 100% Tariff, Citing Restrictions on Rare-Earth Elements":
We thought China's move was noteworthy enough to make it one of the eight links for October 9:
"China unveils sweeping new export rules on rare earths, batteries"
The Chinese seem to be pretty good negotiators.
Like the Indians and the Jews, having a five thousand year history of doing same seems to be an advantage.
While early this morning Marc Chandler made it part of his headline:
Capital Markets: "China Takes Dramatic Measures, While Japan's MOF Warns Against Excessive Yen Moves"
