Need To Know: Why Everybody Should Stop Blaming Trump And His Tariffs For The Market Retreat

Even the staunchest Donald Trump supporter has to admit (but likely won’t) that he deserves at least some of the backlash dogging him since the election.

But as stocks look set to rally today, it’s worth asking: Are the president and his tariffs really the driving factor in the latest market retreat?

Of course, the Donald loved tweeting about the Dow’s DJIA, -1.77%  surge when the blue-chip gauge was taking out new highs on a daily basis. He doesn’t appear all that interested talking about his role now that it’s in the dumps. While the Dow appears on track to gain a couple hundred points today, it shed 1,413 points last week.

Wolf Richter of the Wolf Street blog says if the president wanted to dodge the blame, he’d actually have a pretty good case.

“Everyone knew Trump would crack down on the trade imbalances. But the fact is simple: During a bull market, this type of ‘bad news’ would have caused stocks to jump 6% at a minimum in the week,” he explained in a blog post. “A bull market climbs a wall of worry, analysts would have said. Nothing would have mattered.”

Yet the headlines from Reuters and the Journal scream “Wall Street nosedives as investors flee on trade-war fears,” and “Trade fears jolt global asset prices.”

Richter used the illustration below — our chart of the day — to put the decline in perspective. “The drop is big enough to show up on a long-term chart,” he said, “but given the nine-year 320% rally, why would anyone be surprised?”

Richter’s takeaway: It’s not Trump’s fault. Everyone knew he was going to crack down on trade imbalances, yet kept feasting on stocks the whole way up.

“Reality is a little harder to stomach for these folks. The stock market is horribly overpriced, with many individual stocks at absolutely ludicrous levels,” Richter wrote. “This is a flaming stock-market bubble. Every indicator has been pointing it out for years. At some point, bubbles reach their maximum and begin to deflate.”

Key market gauges

Futures for the Dow YMM8, +1.36%  and the S&P ESM8, +1.37%  are sharply higher on hopes that U.S.-China talks can avert a trade war. Asian markets ADOW, +0.19%  closed mixed, while European stocks SXXP, +0.51%  are rallying. Gold GCM8, -0.13%  and crude CLM8, -0.11%  are declining.

See the Market Snapshot column for the latest action.

The buzz

Trade-war fears may be easing somewhat, thanks to Treasury Secretary Steve Mnuchin saying that he’s “cautiously hopeful” about avoiding tariffs as Washington and Beijing negotiate.

USG USG, +0.09%  shares are soaring early after Berkshire Hathaway BRK.A, -2.76% BRK.B, -2.62%  revealed it has offered to sell its stake in the building materials group to Knauf.

China’s oil futures are surge in their debut, as the world’s largest importer of crude aims for a new benchmark for global transactions.

Finish Line FINL, +6.57%  is surging after Britain’s JD Sports JD., -0.20%  said it will buy the retail chain.

The mess at Facebook FB, -3.34%  doesn’t look to be going away anytime soon. With Tim Cook chiming in (see “The Quote” below), the #DeleteFacebook movement gaining steam, and with even Tesla’s TSLA, -2.45%  Elon Musk apparently pulling his pages from the site, management is scrambling into serious crisis-control mode.

On Sunday, co-founder Mark Zuckerberg took out full-page ads in several British and American newspapers say he’s sorry for a “breach of trust” in the Cambridge Analytica scandal. Watch for more developments on this front throughout the week. Is it time to buy this thing yet? Check out our call of the day below.

The president allegedly had sex with a pornstar after saying she reminded him of his daughter, then had his lawyer attempt to pay for her silence. Or, as us Americans like to call it: Monday.

Yes, Stormy Daniels finally appeared on “60 Minutes” on Sunday night, with lots of details emerging during the interview, including allegations she was threatened to keep quiet about her relationship with Trump. “I was concerned for my family and their safety,” she told Anderson Cooper. But it was one line, in particular, that lit up the internet:

The quote

“The ability of anyone to know what you’ve been browsing about for years, who your contacts are, who their contacts are, things you like and dislike and every intimate detail of your life — from my own point of view, it shouldn’t exist.” — Apple’s AAPL, -2.32% Tim Cook, talking in Beijing about the need for “well-crafted” regulation in light of the Facebook fiasco.

The call

So, is now the time to scoop up Facebook shares? Barron’s took deep dive into the rebound potential of the beaten down stock and issued a strong ... maybe?

“As a dot-com darling, Facebook is losing its luster,” writes Jack Hough. “As a sin stock, however, it’s looking mighty tempting.”

The question for investors: Is the backlash against Facebook priced into the shares? Hough says there are still plenty of metrics to like, such as strong revenue growth and its beefy profit margin.

“A regulatory crackdown might be overdue, but the shares look like the punishment is already priced in,” Hough says, pointing out that Facebook may be getting beaten up these days, but it still counts 30% of the Earth’s population as regular users.

None of this is to play down the seriousness of Facebook’s lapses, and it can surely do a better job of managing its current crisis,” he explains in the Barron’s feature. “But the backlash against the company is rooted in the fact that its marketing platform is so effective, which bodes well for continued growth.”

The stat

$100,000 — What an iPhone might cost if Apple were forced to manufacture them only in America, according to this estimate from Forbes.

The economy

A fairly light schedule is on tap for Monday in terms of data, with the Chicago Fed National Activity Index hitting at 8:30 a.m. Eastern Time, and the Dallas Fed Survey of Manufacturing Activity following two hours later.

On Tuesday, we’ll get a look at the Case-Shiller House Prices Index, and then the third estimate of fourth-quarter GDP arrives a day later. The end of the week should be relatively quiet, with markets closed for Good Friday.

Random reads

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He came to this country legally. He served two tours in Afghanistan. Got addicted to drugs. Now he gets deported and fears execution.

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America takes another step toward tyranny.

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