Just got a little more evidence of that from this evening's Asia edition of Bloomberg's Markets Live Blog:
"What has been amazing is that earnings haven't been reduced until this week. There's a large amount of denial going on in financial markets about the severe deterioration in the U.S.-China relationship, never mind the recent addition of the Mexico tariffs. And because equity strategists were refusing to accept the new tariff reality, many financial participants took the unchanged earnings estimates as proof that the trade war isn't a major negative -- a dangerous circle of denying reality.
Well, BofA and Citi just cut their U.S. corporate profit forecasts -- apparently among the first Wall Street strategists to react to the U.S.-China trade war escalation that occurred four weeks ago.
The estimate cuts were relatively marginal. But perhaps we just need to wait another four weeks for equity strategists to react to the Mexico tariffs. And the India designation. And the further escalation of the U.S-China trade battle. And the deterioration in credit markets. And the disappointing economic data across the globe."
Mark Cudmore Managing Editor, Markets LiveWhile typically the waking up to this kind of reality wouldn't be welcomed news, this time it is! The folks negotiating new trade arrangements need to understand the undeniable danger of playing the tariff card to this degree; hopefully Wall Street can nudge them in the right direction...
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