Goldman Sachs on trade war: "We’ve turned more cautious as have our investors"

Investors are becoming extremely nervous as the rhetoric of trade war escalates into something with real consequences, according to Goldman Sachs Asset Management International Chief Executive Sheila Patel.

"We finally got to a place where there's no going back," Patel said. "We became more cautious as our investors."

The escalating trade strains have sent US stocks to their sharpest sellout since April after Donald Trump made further threats that were met with promises of counter-actions from China and Europe. The biggest sales were in the technology sector, after rumors surfaced that the Trump administration is planning to impose restrictions on China's investment in the US technology sector.

Adding to the concerns of investors, companies began to report real damages from these tariffs. Harley-Davidson Inc. commented that it would shift some of its production to other locations.

Mixed messages on what will and will not happen for protectionist measures "is part of what confuses sentiment," said Patel.

Before, there have been many cases in which such rhetoric has not caused any action, investors were more relaxed. Now, "something really can happen from the United States, which will lead to a reaction from China as well as Europe." This reaction, and the subsequent an eye for an eye play, really scares investors," she said.

Source: Bloomberg

Read more:

• And for all the bounty hunters: Iran offers $80m for the head of Donald Trump
• US service member and 2 US Defense Dept contractors killed in Kenya attack
• Iranian Quds leader Qasem Soleimani has been killed – how are markets reacting
• A calm end of an otherwise loud 2019
• Old but Gold – Top 5 posts of Varchev Finance