August 25, 2019

On Friday, the S&P 500 was down 2.6% after Trump escalated the trade war with China. And Toronto got pulled down 1.3%.

Almost all of the stocks on our list were down. Among the hardest hit were Apple – down 4.6%, and FedEx – down 3.9%, and TFI International – down 3.2%.

Linamar was down 3.7%. It has experienced slower sales in its agricultural division due to the trade wars and this could certainly get worse before it gets better.

It seems to me that Donald Trump wants a trade war. It may be that his strategy is to paint China and many other countries as basically enemies and himself as the right leader to fight these enemies.

The U.S. economy and the stock market has done very well under Trump so far. But there is certainly a risk that the economy is now softening and an even bigger risk (for investors) that “the market” will now decline in the face of the risks of the escalating trade war. So far, the market has bounced back with the next kernel of positive trade news. But that may not last. Over the weekend there was apparently some progress on a trade deal with Japan. I am skeptical that this will be enough to reverse Friday’s negative tone.