American small and medium-size companies that rely on China are scrambling to adjust their business plans in response to the escalating trade war.Traderead more
Here are the products that stand to be the most affected by China's new tariffs on $75 billion worth of U.S. goods.Marketsread more
The European Union will respond in kind if the U.S. imposes tariffs on France over digital tax plan, EU chief Donald Tusk told G-7.Technologyread more
The world's second biggest economy is past a point where it cannot ignore its enormous debt anymore, according to an analyst.China Economyread more
Trump said he will raise tariffs on $250 billion in Chinese goods to 30% and hike duties on another $300 billion in products to 15%.Politicsread more
China said on Saturday it strongly opposes Washington's decision to levy additional tariffs on $550 billion worth of Chinese goods and warned the United States of consequences...Politicsread more
Stocks dropped after Donald Trump ordered that U.S. manufacturers find alternatives to their operations in China.US Marketsread more
The final week of August could be highly volatile as markets fret over the economy and the latest developments in trade wars.Market Insiderread more
Federal Reserve Vice Chair Richard Clarida said Friday that the global economy has deteriorated in the past month.Marketsread more
The latest escalation in the trade war ups the odds the economy will fall into recession and that the Fed will aggressively cut rates.Market Insiderread more
"We don't need China and, frankly, would be far better off without them," Trump tweeted.Politicsread more
For investors thinking of buying the dip, we suggest you consider two parallel trends in 2018. In first half of 2018, "FAANG" stocks drove 50 percent of the S&P 500 gains, while deregulation momentum in the U.S. suggested the tech regulation happening in Europe would stay in Europe.
But in the last six months, tech has given away all its gains, and attitudes toward tech regulation in the U.S. have flipped for investors, politicians, the media and the broader public. Tech companies are no doubt currently profitable, but unexpectedly negative disclosures from management at Facebook, Apple and Alphabet continue to fuel investor anxiety.
Tech valuations were priced for the most growth but were not priced for additional risks to that growth – thus they have been the whipping boy of Mr. Market, in a correction that has hit all stocks.
Don't underestimate the lingering negative consequences of this trend. The technology manufactured by Big Tech is used in the operations of nearly all corporations. Most of the time, buyers of new technology aren't concerned with how or why it works, they are interested in the benefits to their productivity and bottom line. However, when questions begin to arise around the long-term costs to those benefits (i.e. loss of privacy, unclear ownership of data, monopoly/inability to switch vendors, etc.), history suggests markets react first and ask questions later.
Note that the bond market has started asking the first questions about technology risks. Moody's recently announced that it will start evaluating organizations' risk relative to a major cyberattack, following S&P's earlier announcement in February that it will also factor cyber and technology risk management into its' ratings decisions. Expect sell-side analysts to continue the trend and take technology risks into consideration when determining target prices for stock recommendations. On our side, we plan to publish a technology risk index to help the investment community utilize a new metric for making investment decisions. The goal is to help investors expand their tool box ahead of more technology regulation likely to be implemented.
The bottom line: one important lesson from the tech-led sell-off is that how companies manage and disclose their technology and cyber risk is now a serious business risk. The management of business risks always impacts long-term shareholder value over time.
2018 represents the evolution of technology and cyber risk from the story of lost customer data, embarrassing public disclosures and the occasional firing of the C-suite. It's now the No. 1 business risk according to the World Economic Forum. It's also the US' biggest threat according to the Pentagon.
The market is selling off because of this shift, and the rating agencies are moving because of it too. Start adjusting your investing tool kit to stay ahead of the broader trend of an increasingly bright spotlight on cyber and technology risk before the regulators do it for you.
If you are looking ahead for the next companies to be in the spotlight, it's likely to shine brightest in those sectors where advanced technology intersects most with our personal safety: medical devices, healthcare, autos and aircraft manufacturers.