Premarket:
U.S. equity futures are bouncing around a bit this morning; going from notably negative to flat, now moving lower once again.
China’s media is painting a picture of resolve that China is not going to bow to the tariff threat, and, thus, is resigning to the reality that a deal simply may not get done. More detail on the impetus for Trump’s Sunday tweet suggests that China is attempting to renege on agreements relating to the legitimate issues; IP theft, forced technology transfer, etc.. The move off of the overnight lows came when Trump tweeted that he spoke with China’s negotiators and he was told they were “coming to make a deal”. He also added “we’ll see, but I’m very happy with over $100 billion year in tariffs filling U.S. coffers… great for U.S., not for China.”
Despite Trump’s tweet this morning, it appears as though both sides are digging in and are willing to allow their respective equity markets to suffer more pain in the process. If, on the other hand, this week’s modest drubbing was enough to get their attention, as the tweet suggested, resulting in China recommitting to previous commitments, and both sides agreeing to remove all tit-for-tat tariffs, we’ll see a major global rally.
The latter occurring by Friday seems somewhat far fetched at the moment.
Technically-speaking, a decent move lower today will test some key support levels. If they don't hold, we could see sellers come in in a big way; SPX 2800 would be the next serious support level…
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