I've been looking at a sea of red here in the Pacific on Monday. U.S. President Donald Trump's fierce rhetoric over the weekend is more than likely just a negotiating tactic. But you can never be too sure.
His threat to force U.S. companies to withdraw from China is unsettling. Markets struggle to make sense of what that sort of idle threat means for asset prices.
"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing our companies HOME and making your products in the USA," he said in a Twitter message.
"We don't need China and, frankly, would be far better off without them," he added, for good measure.
Of course, sensible U.S. companies have already been looking at alternatives to production in China. In fact, many were doing so before the trade war eve began, due to rising wages in China.
It's the very real increase of tariffs on Chinese goods that is doing the damage to stocks on Monday.
China on Friday said it was upping import duties on 5,078 categories of U.S. goods, which will be subject to an extra 5% or 10% tax. Those changes go into effect in two stages, on Sept. 1 and Dec. 15.
Trump said that previous and planned tariffs on $550 billion worth of imports from China would be increased by 5 percentage points -- to 15% and 30% -- effective Oct. 1.
Net result: Everything gets more expensive. Consumers lose. Exporters struggle to re-price their goods against competitors who don't contend with these duties. Arguably, the tax collectors gain, but the U.S. federal deficit continues to rise and is set to next year top $1 trillion. Collecting more tax on fewer shipments doesn't net you more money.
In fact, I was just speaking with a major institutional fund manager of real estate. He detected a notable shift in sentiment among local players in Shanghai, Singapore and Hong Kong that began 12 months ago, but has intensified in the last two or three months.
Property owners in those three cities -- his investment destinations of choice, the ones he knows best -- decided to "take some chips off the table," meaning they put assets on the block. They include rich families, wealthy individuals, small businesses and industrialists, and the shift in sentiment has been broad.
Property assets take a longer time to shift. So those sales will be coming through now and in the months to come. International buyers have recently found opportunity that hadn't been there before, because local competition for assets was so fierce. Now, with these latest shots across the bow in the trade war, even the international money managers are protecting their dry powder.
My home market of Hong Kong is the worst performer on Monday, down as much as 3.5% in morning trade before recovering half those losses, to end off 1.9%. That means Hong Kong stocks have surrendered any gains established earlier in the year, and are staring at a 0.6% loss in 2019.
The benchmark Hang Seng index had not responded much to the ongoing protests in the city until they led to a city-wide strike, and the closure of the airport for two days. Those real-world effects dented the insouciance of investors, and the Hang Seng index is down 11.2% in the last five weeks.
The 12 weeks of pro-democracy demonstrations continued at the weekend, with demonstrators throwing petrol bombs at police. Several officers drew their guns, and one fired a live-bullet warning shot, the first time that's happened since the trouble began. This is far from over.
Chinese stocks were down 1.4%, in the form of the CSI 300 index of the largest companies listed in Shanghai and Shenzhen. That mimicked losses in Japan, with the broad Topix index of all stocks in the first section in Tokyo, was down 1.6%. Singapore, down 1.5%, South Korea, off 1.5%, and Aussie stocks, down 1.3%, all showed similar magnitude of losses.
I concur with my property-fund managing source that sentiment is gloomy in Asia. Each fresh hope of progress on trade talks is undone by another barrage of bad news in Trump's next attack.
Japan and the United States said on Sunday that have agreed a trade deal in principle that they'll sign off on next month. That's when Japanese Prime Minister Shinzo Abe will be in New York.
Japanese markets showed no enthusiasm for what may well be hollow promises, again, with few details on the trade deal. Trump continues to be obsessed with vote-winning agricultural-goods shipments, as if we were back in a bartering economy and not the 21st century of digital services. Japan watchers want to see the fine print on auto shipments before they'll say whether Abe gave up too much.
It has been a weary Monday trade, as investors have little appetite for risk. It's going to take concrete detail, not words on Twitter and more good cop/bad cop talk, to make them hungry again.