For those investors who are worried that the fate that has befallen Apple, which announced a revenue guidance cut due to a slowdown in "Greater China" coupled with what appears to be an implicit boycott by Chinese consumers, may hit more US companies President Donald Trump’s economist advisor has some surprising honesty: you are right.
According to the chairman of the White House Council of Economic Advisers, Kevin Hassett, the trade war with China will force many U.S. companies to join Apple in announcing lower than expected earnings.
"It’s not going to be just Apple,” CEA chairman Kevin Hassett said in an interview on CNN. "There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China."
It was not exactly clear why Hassett "boasted" with this development, after all the last thing the US market needs now is an earnings recession, but there it is.
Hassett said that it is a softer economy in China that is cutting into U.S. companies sales there and that economic pain gives Trump leverage in ongoing trade negotiations. “That puts a lot of pressure on China to make a deal,” he said, although judging by today's market performance what he meant is that it puts just as much pressure on the US to "make a deal."
Hassett's spin: In the long run, U.S. companies should benefit despite the short-term damage to their bottom line, he added.
He concluded by saying that "If we have a successful negotiation with China then Apple’s sales and everybody else’s sales will recover."
While he did not explain what would happen to sales if the negotiations was not successful, it was implied.