The chip sector of the Korean and US stock market sold off sharply this morning on the news that a firm in China announced at a conference that it has made a significant step forward in the craft of manufacturing memory chips. Elon Musk apparently observed that China normally has significant scale in manufacturing in just about everything, so a new-and-better chip might make significant inroads in the current chip market. Arguably worse, it might decide to withhold the advance from the rest of the world, compelling potential users to set up shop in China.

Chip stocks were looking a bit toppy before this news, so the resulting selloff in Korea and the US can’t come as a huge shock. Several key characteristics of the current administration make the situation significantly riskier than it otherwise might be, however: the attack on universities, ICE, and the aversion to people with technical expertise. The US has also decided to deny China access to the most advanced chip-making tools from ASML, forcing it to intensify its own development efforts.

So one might also ask whether the shoe isn’t now on the other foot–with China moving ahead of the rest of the world and potentially opting to withhold its advances from the US.

In different times, the market would find this situation a reason to rotate away from IT to, say, Consumer Discretionary names. But Washington’s economics of tariffs and shrinking the workforce, as well as the visions of 1930s Europe its policies conjure up, have stunted profit growth there and diminished the value of the sector’s brand names and distribution networks.

Some consumer names have been showing strength over the past short while, but I don’t see any strong pattern to the sectors ups and downs. But it’s at least worth thinking about how to react to upcoming election results.