The idle Process

On Aug 23, China anounced that it will impose as much as 10% tariff on around $75 billion goods imported from US. In the afternoon, the President of US strike back that the US would heap another 5% tariff on around $550 bilion goods from China. Obviously, there will be input inflation. Most of the tariffs will be burdened by the consumers. As the importers pay the import tariffs, the extra cost will be passed on to the consumers. As US is a democracy country, while China is not. No matter what the hurt the Chinese people get, they can't complain as the CCP controls everything. It's a different story here in the US. The President have big pressure as there are a lot complain. If most US consumers only focus on their own loss during the trade war, then the country will lose the war and most importantly, loss the future. If you always rely on other countries to provide cheaper goods, you are gambling the future on other countries.

When the market opens early in the morning, it went down slightly. Suddenly, the indexs went surging. In less then 15 miutes, the S&P 500 climbed almost 2 pct. It was so astonishing, so I check the news and found the headline is, the USTR has removed some items from the tariff list, also  determined that the tariff should be delayed to December 15 for certain articles. These items are mainly consumer goods. That's why the AAPL stock were madly rising. I think it just indicate it is not easy to win the trade war for the Trump administration. First,  President Trump always regards the rise of the stock market as his own political achievements. As the trade war intensifies, the financial market has great pressure to go down. Secondly, if he increase the tariffs, inevitablely, the prices of almost all goods will rise, that means the inflation rate will get higher, then why the FED would cut the rate then?

If there is anything today's violent reversal in the market demonstrated, where this morning's inexplicable levitation (well, maybe explicable now that "terrible news is great news" again) was smashed with stocks plummeting once Trump tweeted that the China trade war ceasefire is dead, and the US would impose "a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country", it is that algos, quants, and systematic funds remain the marginal price setters of the US stock market. 今日上午，美股一路高歌，直到川普总统一条推特将之终结。推特说到，与中国的贸易战停火已经腹死胎中，美国将要对中国剩余的出口到美国的3000亿美元货物征收“一个小小的10%的关税”，股市随之狂泻。这种暴力反转说明，算法、宽客和系统化基金仍然是美国股市的基础定价者。 Indeed, as Bloomberg's Andrew Cinko said when commenting on today's early morning levitation, it "looks more like it's being driven by ETF flows or perhaps quant- or multi-strategy firms. That's money that tends to go out as quickly as it came in, leaving the S&P