Bad News For Stock Market: Trump Accepts Pain of Trade Conflict

The headline says it all.

ZH: "We May Take A Hit": Trump Warns Investors To Prepare For "Pain" In The Market
Speaking on WABC Radio's “Bernie & Sid in the Morning’’ program, Trump said "I’m not saying there won’t be a little pain so we might lose a little of it but we’re going to have a much stronger country when we’re finished, and that’s what I’m all about.’

"We have to do things that other people wouldn’t do. So we may take a hit, but you know what, ultimately we’re going to be much stronger for it,’’ Trump said during the radio interview on Friday. “It’s something we had to do, and ultimately if you take a look it’s not only trade with China - it’s everybody."

To be sure, stocks have fluctuated dramatically in the past few weeks when Trump drastically intensified trade actions and jawboning against several countries, mostly China. Indicating that he is willing to accept some notable losses in the S&P, Trump said in the interview Friday that “the market’s gone up 40% or 42%.” Which suggests that the president would be ok with a drop of 20% or so if it means winning trade war against China.
The one thing I thought might change Trump's mind is a slump in the stock market and short-term economic pain from a trade war. This still doesn't indicate a trade war will unfold, but it does mean the U.S. can escalate much farther than China anticipated. The next shoe for those who want to play the stock market volatility around trade is polling. Given social mood, I would bet on a trade conflict with China polls more favorably than is generally believed in finance/economics.

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