US Equities Tumble On Ross' China "Direct Threat" Comments

Everything was looking so awesome this morning, until Commerce Secretary Wilbur Ross told a group in Davis that China's 2025 Technology Plan was a "direct threat" to the US, sparking another round of protectionist-fear-driven selling in stocks. From Bloomberg:

  • ROSS: CHINA `SUPERB' TALKING FREE TRADE, ACTING PROTECTIONIST
  • ROSS: STEEL FORUM HAS MADE `ZERO DIFFERENCE' FOR OVERCAPACITY
  • ROSS: CHINA IS EXPORTING MORE STEEL THAN U.S. HAS IN CAPACITY
  • COMMERCE'S ROSS: CHINESE IP REPORT WILL STILL `BE LITTLE WHILE'
  • ROSS: IT WAS NO ACCIDENT THAT U.S. DIDN'T DROP TTIP W/ EUROPE
  • ROSS: THERE'S GROWING RECOGNITION OF ACCUMULATED TRADE RISKS

Some note, however, that the Bloomberg headlines hit minutes after the stock dip was already underway, so it may be an exercise in goalseeking a reason for the drop.

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Trannies were already under pressure from United's drop, but Ross' comments pushed The S&P red briefly...

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The move in stocks has also been assigned to the fact that 10Y Yields are back at 2.66%, triggering fears that TINA is over and the cost of funding buybacks is soaring.

Interestingly, no reaction in bonds or the dollar (which both continued their trends lower in price).

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