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Why The Trade War With China Makes The US Stock Market More Volatile

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From Texas Standard:

Volatility is high on Wall Street right now, and it’s affecting everyone, not just those with a stock portfolio.

Angelos Angelou of Angelou Economics says so many are affected, in part, because 40 percent of the U.S. workforce has individual retirement accounts with investments in the stock market. Angelou says many factors have contributed to the volatility, especially the trade war with China.

“My take is that unless we have certainty that the trade war between the U.S. and China is going to be resolved, and resolved quickly, we’re gonna have a volatility,” he says.

Angelou says high volatility doesn’t mean people should take their money out of the market entirely, rather they should take this as an opportunity to diversify their investments.

“People will gravitate toward [the kinds of] stocks that [have] lower returns, but consistently outperform the market during a recession,” Angelou says. “Usually utilities or telephone companies might be the opportunity there.”

Angelou also says the economy will benefit from the 2017 tax bill for another six to 12 months, and then after that, the economy will start to slow down.

"You are going to see more of a normal rate of growth in the gross national product, back down to maybe around two percent," Angelou says. "So, the economy inevitably is gonna slow down."

He says trade wars would enhance the slowdown.

"If we're buying less, other countries are buying less, who are all these additional production and manufacturing going to be sold to?" Angelou says.

To keep the economy growing, he says the U.S. will need to reach international trade deals through mutual agreements, rather than a "my-way-or-the-highway" approach.

"There's no winners or losers in trade wars; all of us lose," Angelou says.

Written by Morgan Kuehler.

Copyright 2020 KUT 90.5. To see more, visit KUT 90.5.

Laura first joined the KUT team in April 2012. She now works for the statewide program Texas Standard as a reporter and producer. Laura came to KUT from the world of television news. She has worn many different hats as an anchor, reporter and producer at TV stations in Austin, Amarillo and Toledo, OH. Laura is a proud graduate of the University of Missouri-Columbia, a triathlete and enjoys travel, film and a good beer. She enjoys spending time with her husband and pets.