Friday, October 5, 2018

JPMorgan Downgrades China Stocks, Forecasting "Full-Blown Trade War"

It's getting ugly out there.

JP Morgan has announced that as a result of its new baseline assumption for a "full-blown trade war" next year between the U.S. and China that it has downgraded its bullish call on Chinese stocks.

JPMorgan strategists including Pedro Martins Junior, Rajiv Batra and Sanaya Tavaria write that the trade conflict will only escalate as the U.S. maxes out tariffs on Chinese imports.

"A full-blown trade war becomes our new base case scenario for 2019," the strategists write in a note. "There is no clear sign of mitigating confrontation between China and the U.S. in the near term."

"Higher tariffs are squeezing Chinese manufacturing’s profit margin, reducing the investment incentive and hiring, which would then drag on consumption via reduced income," they continued.

On top of the trade tension, the  US Navy is proposing a major show of military force against China.

(ht ZeroHedge)


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