U.S. takes down Chinese spy balloon: The impact on stocks and what it means for U.S.-China relations

Yahoo Finance’s Rick Newman joins the Live show to discuss the Chinese spy balloon and what its takedown means for the China-U.S. relationship.

Video Transcript

- The number one thing to note today is the fallout from the United States taking down the Chinese spy balloon. Let's take a look at how this is impacting some China stocks right now here. And we've got the NASDAQ Golden Dragon index pulled up here for you. A few of these, of course, are going to be the US traded companies. But you can see even some of the moves that we're seeing pre-market here as labeled underneath, Alibaba, that's down pre-market by about 2.3%. jd.com also about the same on a percentage basis. Pinduoduo, that's also down by about 3.6%.

Now, let's remember this comes in the context of many of these names over the course of this year thus far having been up. In fact, you'd be hard pressed to find any red on this screen. We've got three spots there particularly. But with the context of Alibaba being up 20% year to date at this point in time, a lot of these are seeing pre-market moves to the downside here this morning. And so the impact and fallout of this Chinese surveillance balloon will hit more than just stocks.

Let's bring in Yahoo Finance senior columnist, Rick Newman. Rick, good to have you here with us this morning. All right, help us break this down from the US-China relations standpoint.

RICK NEWMAN: It's not a surprise that China would be spying on the United States. What is a surprise is that they would either do it so blatantly as to deliberately send this balloon across US territory or that they would screw up so badly. And we don't really know which it was. I guess the prevailing theory for now is that China just screwed up. This either was not supposed to enter US airspace. It was perhaps supposed to come close. Or something else went wrong.

So the most obvious bit of blowback here is that Secretary of State Tony Blinken, he was supposed to be in China over the weekend. He canceled that trip of course. Now that will probably get rescheduled. But I think both sides realize that they want to get back to whatever you might call the normal state of relations between the United States and China at this point. US relationship with China has been hardening during the last several years. It began with President Trump imposing tariffs on Chinese imports. And Biden has taken a hard tone toward China as well.