China Makes It Official
One big step closer to 'war'... President Trump ups the stakes once again... China makes it official...
Well, that escalated quickly...
Yesterday, we noted that trade tensions were on the rise yet again, following a weekend "tit for tat" between the White House and China.
In short, on Friday, President Donald Trump announced that his administration planned to impose 25% tariffs on another $50 billion of Chinese imports.
The Chinese government responded to this announcement with an announcement of its own... imposing equal tariffs on another $50 billion of U.S. goods.
And this announcement was met with yet another from Trump, threatening up to another $100 billion in tariffs in response.
But last night, President Trump went significantly further...
As the Wall Street Journal reported...
President Donald Trump escalated a trade conflict with China Monday, asking his administration to identify a new list of $200 billion in Chinese goods that would be penalized with tariffs...
In a statement late Monday, Mr. Trump said that he now wants U.S. Trade Representative Robert Lighthizer to identify a second tranche of goods imported from China for tariffs of 10%.
Should China retaliate to those additional tariffs, Mr. Trump promised to escalate even further by placing tariffs on another $200 billion in Chinese goods.
To no one's surprise, China responded to the news with its strongest statement to date...
It even went so far as
In a statement posted on its website, [China's Commerce Ministry] said China will protect its interests, taking both quantitative and qualitative measures against the move.
The fresh threats of additional tariffs violate prior negotiations and consensus reached between the two countries, the Chinese Commerce Ministry said. A trade war will hurt companies and people in both countries, it added in the Chinese statement.
"This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the international community," the Commerce Ministry said.
"The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," it said.
China is right about one thing...
This is how a real trade war begins... with each side escalating until there's no turning back. And contrary to the president's comment earlier this year that "trade wars are
In other words, a real trade war would be a net negative for both the U.S. and Chinese economies... and there is no guarantee the U.S. would come out on top. In fact, as our colleague Steve Sjuggerud has explained, the data show Chinese companies – particularly those in his True Wealth China Opportunities portfolio – have far less to lose than many of those here in the U.S.
Still, it appears the recent escalation has finally caught the market's attention...
Stocks in both the U.S. and China opened sharply lower on the news this morning, with the latter suffering the brunt of the damage today. The benchmark Shanghai Composite Index fell 3.8% – its largest single-day decline since February 9 – while here in the U.S., the S&P 500 Index closed down just 0.4%.
But rest assured, nothing has changed with Steve's bullish outlook. He remains optimistic that a real trade war can be avoided... and more important, despite their recent underperformance, Steve continues to believe Chinese stocks are one of the greatest investment opportunities in the world today.
Of course, as we've noted in recent Digests, Steve is also super-bullish on commodities...
Like Chinese stocks, he believes the broad commodities sector is one of the few remaining areas of the market that offers a legitimate chance to earn returns of 500% or more today. In fact, he believes gains of 1,000% or more are likely over the next several years.
But successfully profiting from a commodities boom is often easier said than done. You not only have to get the timing right, you have to choose the right vehicle to do so safely.
Depending on the particular commodity, the choices include futures... exchange-traded funds ("ETFs"), exchange-traded notes ("ETNs"), or mutual funds... companies that discover and produce the commodity, or those that offer the "picks and shovels" to those that do... and even buying the actual commodity itself.
The choices can be overwhelming even for experienced investors... and each carries its own specific risks.
Fortunately, Steve says it doesn't have to be that complicated... In short, his research has uncovered one specific type of commodity investment that offers dramatic upside potential with the maximum amount of safety possible. And it's a strategy that any investor can use in virtually any type of investment account.
Again, Steve is hosting a special live event this Thursday, June 21, at 8 p.m. Eastern time to explain exactly why he's so bullish today... and how you can take advantage of this particular investment to make up to 500% or more over the next several years.
It's completely free to attend, and you'll even get the name and ticker symbol of one of Steve's favorite opportunities just for tuning in. Click here to learn more and reserve your spot now.
New 52-week highs (as of 6/18/18): CBRE Group (CBRE), WisdomTree U.S. SmallCap Dividend Fund (DES), Facebook (FB), Fairfax Financial (FRFHF), ETFMG Prime Mobile Payments Fund (IPAY), and Verisign (VRSN).
Another busy day in the mailbag: More feedback on China... comments on The Battle for America... another thoughtful response on Father's Day... and a question from a "paid-up subscriber." As always, send your notes to feedback@stansberryresearch.com.
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"The one thing I have not read about in your research is the change in China about dogs. I'm sure a number of your subscribers remember when they were eating them! Now, there is the 'one dog' rule in Shanghai! That has replaced the
"The other thing I found amazing... 6 years ago when my husband was living in Beijing I took his dogs to the vet. There was a long table where owners were sitting with their pets with oxygen masks on them, paying by the minute!!! To
"Dear Porter, I am a very satisfied Alliance member since 2012. Best investment I ever made and I'm a much smarter investor due to your publications. I must say, the Investment Advisory letter you published on Friday sent chills down my spine when I read about the 2020 presidential race and what kind of candidate could get elected. I think you are spot on. I downloaded your Battle for America book and read it over the Father's Day weekend.
"There are some sobering predictions. I agree wholeheartedly with your sentiment that we might see a shift to an ultra-progressive president that will make political moves to give away the store. I'm now 55 years old and have built up a nest egg, but worry greatly about losing it through some government confiscation to fund it all. Thanks for putting it out there and providing some solutions to help folks like me prepare." – Paid-up subscriber Joe H.
"Dear Porter: Although I'm an Alliance Member, some of your best work involves the Friday Stansberry Digests... and I want to specifically call-out the June 8, 2018 edition that discussed Father's Day. In that letter, you described taking an opportunity to tell your offspring how proud you are of them and just how much you love them.
"That Digest spurred me into writing individual handwritten notes to each of our five children, three
"Although these Father's Day notes weren't expected, they were obviously appreciated with much gratitude. The real gift though, was how GREAT it felt for the couple hours it took to actually craft the handwritten messages. For that Porter, I truly appreciate your offering the suggestion!" – Paid-up subscriber Patrick M.
"I've been meaning to ask this question for some time. Each mailbag question that you publish in the nightly Stansberry Digest ends with the following '
Brill comment: Thanks for the note, Andy. The simple answer is that it's a "hat tip" to Jim Grant, publisher of Grant's Interest Rate Observer, whom we greatly respect. For decades now, Jim has referred to his readers – who include many of the world's smartest investors – as "paid-up subscribers."
Regards,
Justin Brill
Baltimore, Maryland
June 19, 2018