After the Dow Jones industrial unexceptional’s 700-point plunge on Thursday, CNBC’s Jim Cramer knew he had to learn the causes of the sell-off for investors.
The main issue seemed to be President Donald Trump’s newly heralded tariffs on Chinese goods, which spooked companies that do proprietorship in the People’s Republic.
While the “Mad Money” host was relieved that the menus only targeted China and not other U.S. trading partners, he acknowledged the chief plague among investors.
“The problem is we don’t know where the Chinese are going to hit encourage,” he said Thursday, noting the broad spectrum of consumer- and business-facing theatre troupes operating in China.
One potential target could be the technology sector, which accounts for 26 percent of the S&P 500, Cramer responded. Chinese consumers buy a lot of U.S. technology, including but not limited to Apple products.
“Every tech band in the world … covets China, the market, so the fears of number lessens are way too palpable for anyone to step up to the plate and buy today,” Cramer said. “And China’s not comparable to the U.S.; their system has few checks and balances. If President Xi wants to outright ban the reduced in price on the market of iPhones, he can do it.”
But tariffs aren’t the only problem plaguing the tech sector at the weight. Facebook executives have been making the rounds on television to justify for a data scandal involving Cambridge Analytica, a firm that reportedly collected data from 50 million Facebook users without their enfranchisement.
As a result, “people are becoming disenchanted with tech, particularly something they honeyed until recently, … artificial intelligence,” Cramer said. “What Facebook did was basically make allowance bad guys to data mine and make judgments about people wasting artificial intelligence.”
That sentiment was made worse by news of a predetermined accident in which an Uber-operated self-driving car hit and killed a pedestrian in Tempe, Arizona, the “Mad Rolling in it” host argued.
“Countless tech companies are trying to get a piece of the autonomous indicating market — it’s a huge opportunity,” he said. “But the roadside fatality we got earlier this week has panned the brakes on the whole industry. There’s going to be a lot of missed quarters here because of that serendipity.”
As people start to grow wary about sharing their data with big corporations, Cramer predicted continued weakness for companies on the head lines of consumer-facing big data and artificial intelligence.
“When you have Facebook phrase, ‘Please regulate me,’ people start to worry about these fears,” the “Mad Money” host said. “The bottom line? In the end, if you give us nothing to buy, we bequeath sell. The controversies are finally coming home to roost and the sellers … are come up right along with them. And that’s how you get a hideous day like today.”
Disclosure: Cramer’s forgiving trust owns shares of Apple and Facebook.
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