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Semis stocks slammed on Huawei crackdown – six experts weigh in

Keris Lahiff

Semiconductor stocks were sliding on Monday as concerns over trade flared up again.

Alphabet's Google GOOGL suspended business with Chinese telecom company Huawei , after President Donald Trump's administration announced it will require U.S. companies to secure a license before working with Huawei.

Six experts weigh in on what this means for the U.S. stock market.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, says the day's news isn't too much of a surprise.

"Chinese trade is $600 billion with the U.S. every year. Huawei is a piece, but it's not a gigantic piece. I suspect that they thought this was coming at some point, because this talk about the Chinese ability to disrupt European-U.S. networks has been bubbling away for a long time. I can't imagine it came as a total surprise."

Scott Nations, chief investment officer at NationsShares, says there are bigger implications to the Huawei story.

"The problem is that the China trade issue is spreading; it's no longer just a trade deal. It's now Google cutting off Huawei and Qualcomm, Intel telling their employees they're not going to sell to the company until further notice. So I think the market is afraid that President Trump has so many balls in the air when it comes to what's going on geopolitically that one of them is going to drop."

Mohamed El-Erian, chief economic advisor at Allianz, says the U.S. can win the trade war but might suffer collateral damage.

"This massive divergence in the U.S. — part of it can be explained that the U.S. is in a better place to deal with higher oil prices and it's in a relatively better place to deal with the trade tensions. Remember, we win a relative trade war. In absolute terms, we suffer, but we win relative to others, so I think the markets have understood that the U.S. is in a better place than the rest of the world. The question is can we stay there."

Craig Moffett, founder and senior analyst at MoffettNathanson, says the decision to cut off Huawei also has political consequences.

"I think it's much more [tied] to national security, but you can't escape that it also has implications for this narrative that China beating us in 5G is politically a very cogent argument, right? And so, to the extent that we can limit the expansion of the 5G network elsewhere by cutting off Huawei from its suppliers helps that narrative."

Jim Cramer , host of CNBC's "Mad Money," says:

"If you own these [tech] stocks please recognize the risk, because nobody is going to raise numbers here and everybody is going to cut numbers. Every one of those companies that you see, those numbers are too high … There's some that aren't related and getting thrown out with the SMH."

Mark Mahaney, lead internet analyst at RBC Capital Markets, breaks down what this could mean for Google.

"I don't recall Google ever doing anything like this in the past. It's probably not material for Google. Google doesn't really have any exposure to the China market except for Chinese exporters who do look to advertise on Google. Potentially, I don't look at the phone sector that closely, but for a company if you're not able to have a full robust suite of Android apps on your phone I don't know what you have. You've got something that's akin to a brick. The reason people buy these phones isn't because of communication, it's because of the functionality embedded in all of the Android and Google apps and services. So there's a real problem on one side, and it's a little unclear to me what the issue is going to be for Google moving forward."




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