...

Our videos are made by the latest news in the world.
Do you enjoy the video? Find it helpful? Want to view more?
Thank you so much!President Donald Trump's threats to slap more tariffs on China are being viewed as a bargaining tactic, and analysts say the most likely outcome is still a deal over an all-out trade war.Stocks were pounded after Trump threatened in tweets Sunday to raise tariffs on $200 billion in Chinese goods and complained about China' s lack of cooperation in talks. Chinese negotiators were scheduled to attend talks in Washington, and while they are still expected to head to the U.S. the makeup of their team is uncertain.The Dow was down more than 470 points at the open on Monday but erased more than half its losses and was down about 200 points as the morning ended. Both the Dow and S&P 500 were down more than 1% before recovering, in the biggest opening gap lower since Jan. 2, according to Bespoke. Much of the 17% gain in the S&P this year has been credited to optimism about trade talks and also an easy Federal Reserve. "The market's response is appropriate. It's trying to understand where we are in the discussions. Is this a setback? I don't think it's a setback at all. It's all sort of a posturing position," said Patrick Palfrey, senior U.S. equities strategist at Credit Suisse. "Trump, at the end of the day is looking to make sure his constituents get the best deal possible, and he wants to make sure he can deliver it. Going down to the wire in negotiations is part of the posturing process."Analysts say it is in the interest of both countries to reach a deal, with China's economy just beginning to steady after a campaign of fiscal and monetary stimulus. The U.S. economy has also shown recent signs of improvement, and April's super strong jobs report gives more credence to the idea that the economy is not near recession, as was believed by many investors earlier in the year. "The President's negotiating tactics may be unconventional but the likelihood of some kind of deal is still higher than nothing getting done," writes Tobias Levkovich, chief U.S. equity strategist at Citigroup. Levkovich said it is not unlike the bumpy progress in the U.S. trade negotiations with Mexico and Canada, which have concluded in a deal that remains unratified by Congress.Like other strategists, Levkovich also points to the fact that the stock market is near an all-time high and that is something that would not be lost on the president. Trump views the stock market as a report card on his administration, so some strategists expect that he would dial back some rhetoric if it was in free fall. "With the S&P near all-time highs, it seems like it was deemed an opportunistic moment to send another shot across the bow in front of meetings to negotiate terms," Levkovich noted.Dan Clifton, Strategas Research's head of policy strategy, said Trump is using the threat of more tariffs to push the negotiators forward towards a deal this week. "If this tactic is successful, the trade deal could be finished in the short run and this volatility would be an opportunity," he noted. He added that it would be difficult to implement the higher tariffs immediately and expanding the list of goods with tariffs would take months to implement.Stocks that got hit the most Monday were trade-sensitive tech names like the semiconductor stocks and Apple and industrial stocks like Caterpillar and Deere. Chinese stocks, Alibaba and Tencent, were also slammed, after a 5.6% drop in Shanghai and 2.9% decline in Hong Kong stocks.Oppenheimer Asset Management chief investment strategist John Stoltzfus said the economic cost of a protracted trade war for both countries will probably encourage the two sides to make a deal. "We expect that any near-term downside moves by the equity markets could be quick to reverse as the US Presidential election of 2020 and a goal of "made in China 2025" remain paramount respective agenda items for the leadership of the US and China," wrote Stoltzfus.Stoltzfus said the drop in stocks more likely creates a buying opportunity than signals more selling ahead.A number of economists still see a deal being reached, but Bank of America economists in Hong Kong warned there could be an impasse because there is ...