Thursday, March 14, 2019

This Morning's Log Entry

Clearly, Trump is bothered by pundits in the media suggesting that he’s desperate for a China trade deal. Thus, he’s pushing back with statements that he’s “in no hurry”, that he “could walk away”, and so on. Additionally, the latest stock market strength, he believes, gives him that prerogative.

On the latter, he’s dead wrong. The economic strains directly resulting from the tariffs implemented since he took office are stemming from more than simply sentiment. Global supply chains are absolutely becoming disrupted, expansion plans have been put on hold, or canceled altogether, and earnings forecasts have been ratcheted down markedly.

If the market begins to believe that a China deal is not forthcoming, it’ll sell off, I suspect markedly (in fact, U.S. equity futures went from green to red this morning on news that there’ll be no Trump/Xi meeting this month, that it’ll be April, if not later).

Of course a strong market selloff would have the Administration immediately pushing for a date with Xi, which I suspect would still bolster stock prices. Although we have to be getting to the point where traders will demand a legitimate (tariff-eliminating) deal signed, sealed and delivered before bidding prices past last November’s highs…

See yesterday's post for an abbreviated version of my current 6-month thesis...

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