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Have you noticed how so much news about the Trump administration comes from “sources?” Generally “unnamed?” If it’s not an official statement from a named source, sure seems like it’s more like a leak, don’t you think?

 

Sure are a lot of leaks coming out Washington these days, which makes you wonder who and why.

 

The latest comment from “sources” came out today and put the Dow Jones into a bit of a dump.

According to CNBC.com, “The White House is weighing some curbs on U.S. investments in China, a source familiar with the matter told CNBC. This discussion includes possibly blocking all U.S. financial investments in Chinese companies, the source said.

It’s in the preliminary stages and nothing has been decided, the source said. There’s also no time frame for their implementation, the source added.”

 

Note once again this only comes from a “source” and nothing has been decided.

 

One of the options supposedly being considered is actually delisting Chinese companies from U.S. stock exchanges and limiting Americans’ exposure to the Chinese market through government pension funds.

According to the US-China Economic and Security Review Commission, there were 156 Chinese companies with a total market capitalization of $1.2 trillion listed on the biggest US stock exchanges as of February of this year.

That sounds like a lot of money. But bear in mind the total market capitalization of the Russell 3000 Index—which covers 98.5 percent of the country’s market capitalization—is $30 trillion. So we’re talking about three percent of the U.S. stock market.

Trump has repeatedly hammered China for unfair and secretive trade practices, and has often discussed different options for turning the screws on the communist government as a negotiating tactic.

 

CNBC says “Restricting financial investments in Chinese entities would be meant to protect U.S. investors from excessive risk due to lack of regulatory supervision, the source said.

The deliberations come as the U.S. looks for additional levers of influence in trade talks, which resume on Oct. 10 in Washington. Both countries slapped tariffs on billions of dollars worth of each other’s goods. The discussions also come as the Chinese government is taking steps to increase foreign access to its markets.”

The announcement generated big ripples in the market, with Alibaba, China’s version of Amazon, having possibly its worst day of the year on the stock market. China’s currency also tanked against the dollar.

 

But as we all know, the market goes up and down — and under Trump, whatever you think of his policies, there’s no denying the market has gone mostly up. In January of 2016, the Dow Jones Industrial Average was trading right around 16,000. It may be “down” today versus yesterday, but it’s still nearly 27,000. Take THAT, China.

 

 

 

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