Remember back to Econ 101, if you took it? The economy was supposed to be impossible to centralize because it is made up of millions of people making hundreds of millions of decisions – about everything. That’s true. But, those people and their decisions were supposed to be rational. People can be expected to think logically about their choices out of respect for their own best interests. The Virtues of Selfishness and all that.
So, how rational is a Trillion-dollar market reaction to a single Tweet about trade with China?
Analysts have now pointed out that the President’s message cost the markets more than $13bn for each of the 102 words in the tweet.
Global stocks have tumbled to a six-week low – with Bloomberg estimating the tweet wiped “about $1.36 trillion” off shares.
The Dow Jones Industrial Average fell about 400 points on Thursday – 700 points on the week – while the S&P 500 and the Nasdaq Composite also dropped.
The FTSE 100 survived the worst of the sell-off, dropping 0.8 per cent while Japan’s Nikkei slipped 0.9 per cent to close at 21,402.13.
South Korea’s Kopsi tumbled 3.04 per cent to close at 2,102.01 – its biggest one day percentage loss since mid-October 2018
A fortune has already been erased from global stocks so far this week, reports news.com.
However, speaking at a rally in Florida last night, Trump insisted the new tariffs were because China “broke the deal.”
This isn’t rational reaction. This isn’t economics. It’s not even financialization for finance sake. This is the product of sorcery.