In fear of FANGs, volatile markets look for reasons to bite: Don Pittis

According to one calculation earlier this week, by MondayPresident Donald Trump's Twitter attack on Amazon hadcost the company's bossJeff Bezos$16 billion US, as the high technology retailer plunged in market value.

It was just one of a series of apparently unrelated stories that had traders unloading technologystocks.

As the week began,a new round of trade war threatsadded to the tech news to set offmarket nerves, at one point sending the Dow Jones Industrial Average down 700 points.

So has anoutbreak of world newsreally made things so much more dangerous for investorsor istheresomething else afoot?

MakingAmazon pay

Looked at individually, the market-moving news seemed laden withdoom.

With his attacks on Amazon he was at it again yesterdayTrump seemed to be implying that one of his country's top technology champions would face alegislative attack, led by the executive branch of the U.S. government, to make the companypay more tax or contribute more to the postal service.

"Unlike others, they pay little or no taxes to state & local governments," he tweeted.

But Amazon wasn't the only tech giant facing a fright.

Manyreports predicted Facebook users would abandonthe site in droves after it was revealed data from the social media titan may have helped Russia swing the 2016 U.S. presidential election that put Trump in office.

FANGs exposed?

Another story hadelectric car company Tesla in retreatafter Elon Musk joked the company was heading for bankruptcy.

Suddenly the market was in terror ofFANG stocks, an acronym for a group of tech stocks led by Facebook, Amazon,Netflix and Google (sometimes called faangsto include Apple).

There's no T for Tesla in FANG, and no U for Uber, but both companies got unwelcome attention for car crashes that appeared to discredit their self-driving technology.

As well as weighing in on Amazon, the U.S. president had a second contribution to destabilizing markets, as the trade war he has been calling for actually seemed tobe underway.

Tariff tantrum

While some analysts blamedMonday's stock market sell-off on FANGs, others insisted the cause was what they called a "tariff tantrum" as the U.S. S&P 500 index headed into correction territory for the second time this year. (In market parlance, a correction is when stocks fall more than 10 per cent from a recent peak.)

Recently Canada breathed a sigh of relief that we had been excused from Trump's promised tariffs on steel and aluminum. But as the list of those being excused from the tariff grew, China could not help noticing that it was the one left paying Trump's protectionist tax on trade.

China's Easter weekend response was to slap trade duties of up to 25 per centon 128 U.S. products, including pork, apples and scrap aluminum, affecting $3 billion worth of U.S. goods.

Perhaps more worrying wasthe thought that Trump would react the same way he did in disputes with North Korean leaderKim Jong-un, responding to China's retaliation with threats of an even bigger counter-retaliation, as he did last night with new tariffs on 1,300 Chinese products.

Cooler heads

But by Tuesday cooler heads had prevailed in stock markets. Even Amazon shares wereup despite the freshTrump Twitter attack.

Taken one by one it seems traders realized there may have been less to all those gloomy news stories than the headlines implied.

There's little doubtthat Amazon's Jeff Bezos, who also owns the influential Washington Post, sees Trump as a political adversary, but his companyis doing fine. The rates he pays to the U.S. postal service that Trump has complained aboutwere negotiated by contract, and it is no secret that Amazon is in the process of setting up its own delivery service.

While Facebook is currently taking flak on security, a chat with anyone addicted to the social media platform will indicate that, while casual users and activists might be participating in the "delete Facebook" campaign, diehards are going nowhere.

In the self-driving car business you can expect plenty more crashes and deaths before the systems areperfected, but road deaths around 30,000 per year in the U.S. have never stood in the way ofdriving technology or automotive profits.

And trade? Trump may have convinced his supporters that China's a cheat, but many of those same supporters could make their anger known in the midterms if the president's loose talk means they lose their jobs. Republicans in Congress are getting one more reminder that a trade war benefits no one.

Clearly having such erratic leadership doesn't help, buteven while Trump tweets threats linking NAFTA with his promised border wall, the latest word from those in the know is that the deal could be completed within the month, news that sentthe loonie sharply higher yesterday.

Market mood

Yesterday the Dow regained most of its Monday losses, but this week's return to volatilityis a reminder that it is not necessarily the individual pieces of news that matter.

Instead, it may bethat telling a market story based on tweets and car crashes misses the point.

In March before Trump began his attacks, Amazon shares had almost doubled in a year. Other tech giants havefollowed a similar trajectory.

With a feeling of uncertainty over trade and the confusing leadership of President Trump, it is not the individual news stories but the nervousness of investors that is the common feature assmall scares triggerthe impulse of anxiousinvestors looking forreasons to sell.

Follow Don on Twitter @don_pittis

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