In fear of FANGs, volatile markets look for reasons to bite: Don Pittis


Harmonizing to one calculation earlier this week, by Monday President Donald Trump’s Ado attack on Amazon had cost the company’s boss Jeff Bezos $16 billion US, as the extreme technology retailer plunged in market value.

It was just one of a series of outwardly unrelated stories that had traders unloading technology stocks.

As the week established, a new round of trade war threats added to the tech news to set off market impudences, at one point sending the Dow Jones Industrial Average down 700 peaks.

So has an outbreak of world news really made things so much more perilous for investors or is there something else afoot? 

Making Amazon pay

Looked at one by one, the market-moving news seemed laden with doom.

With his engage in battles on Amazon — he was at it again yesterday — Trump seemed to be implying that one of his realm’s top technology champions would face a legislative attack, led by the executive sprig of the U.S. government, to make the company pay more tax or contribute more to the postal care.

“Unlike others, they pay little or no taxes to state & local ministries,” he tweeted.

But Amazon wasn’t the purely tech giant facing a fright.

Many reports predicted Facebook consumers would abandon the site in droves after it was revealed data from the group media titan may have helped Russia swing the 2016 U.S. presidential electing that put Trump in office. 

FANGs exposed?

Another story had tense car company Tesla in retreat after Elon Musk joked the callers was heading for bankruptcy.

Suddenly the market was in terror of FANG stocks, an acronym for a bring of tech stocks led by Facebook, Amazon, Netflix and Google (sometimes apostrophized faangs to include Apple).

Facebook founder Mark Zuckerberg in more intelligent times, before the company was forced to acknowledge its data had been tolerant of in a way that may have undermined democracy. (Brian Snyder/Reuters)

There’s no T for Tesla in FANG, and no U for Uber, but both visitors got unwelcome attention for car crashes that appeared to discredit their self-driving technology.

As soberly as weighing in on Amazon, the U.S. president had a second contribution to destabilizing markets, as the have dealings war he has been calling for actually seemed to be underway.

Tariff tantrum

While some analysts rebuked Monday’s stock market sell-off on FANGs, others insisted the issue was what they called a “tariff tantrum” as the U.S. S&P 500 index headed into punishment territory for the second time this year. (In market parlance, a reparation is when stocks fall more than 10 per cent from a late peak.)

Recently Canada breathed a sigh of relief that we had been acquitted from Trump’s promised tariffs on steel and aluminum. But as the list of those being excused from the schedule of charges grew, China could not help noticing that it was the one left answer for Trump’s protectionist tax on trade. 

President Donald Trump, joined by chief of the U.S. navy dressed as an Easter Bunny. Trump’s tweets have been objurgation for destabilizing trade. (Carolyn Kaster/The Associated Press)

China’s Easter weekend comeback was to slap trade duties of up to 25 per cent on 128 U.S. products, classifying pork, apples and scrap aluminum, affecting $3 billion quality of U.S. goods. 

Perhaps more worrying was the thought that Trump would behave the same way he did in disputes with North Korean leader Kim Jong-un, responding to China’s retaliation with portents of an even bigger counter-retaliation, as he did last night with new tariffs on 1,300 Chinese effects.

Cooler heads

But by Tuesday cooler heads had prevailed in stock furnishes. Even Amazon shares were up despite the fresh Trump Trilling attack.

Taken one by one it seems traders realized there may have been less to all those shadowy news stories than the headlines implied.

There’s little mistrust that Amazon’s Jeff Bezos, who also owns the influential Washington Piling, sees Trump as a political adversary, but his company is doing fine. The judges he pays to the U.S. postal service that Trump has complained about were bargained by contract, and it is no secret that Amazon is in the process of setting up its own delivery waiting.

While Facebook is currently taking flak on security, a chat with anyone addicted to the community media platform will indicate that, while casual purchasers and activists might be participating in the “delete Facebook” campaign, diehards are thriving nowhere.

In the self-driving car business you can expect plenty more crashes and deaths up front the systems are perfected, but road deaths — around 30,000 per year in the U.S. — arrange never stood in the way of driving technology or automotive profits.

And trade? Trump may be enduring convinced his supporters that China’s a cheat, but many of those unchanging supporters could make their anger known in the midterms if the president’s promiscuous talk means they lose their jobs. Republicans in Congress are getting one numerous reminder that a trade war benefits no one.

Clearly having such aberrant leadership doesn’t help, but even while Trump tweets threats association NAFTA with his promised border wall, the latest word from those in the be informed is that the deal could be completed within the month, news that sent the loonie sternly higher yesterday.

Market mood

Yesterday the Dow regained most of its Monday wastings, but this week’s return to volatility is a reminder that it is not necessarily the discrete pieces of news that matter.

Instead, it may be that telling a hawk story based on tweets and car crashes misses the point. 

In the past, a congregate of stocks pulling ahead of the rest of the market has been a signal that vendors have become a little too exuberant. 

In Strut before Trump began his attacks, Amazon shares had almost duplicated in a year. Other tech giants have followed a similar flight path. 

With a feeling of uncertainty over trade and the confusing leadership of President Trump, it is not the distinctive news stories but the nervousness of investors that is the common feature as humiliated scares trigger the impulse of anxious investors looking for reasons to traffic in.

Follow Don on Twitter @don_pittis

More analysis from Don Pittis

Leave a Reply

Your email address will not be published. Required fields are marked *