Tweet Trade Turmoil

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OK, so let’s just take a deep breath, step back, and assess the situation:

  1. The United States has, for many months, been ratcheting up a trade war with China;
  2. All attempts in the past for the two sides to get together and hammer out a deal have been comically similar: lots of warm feelings, positive talk, encouraging press releases, and then…………nothing…………..followed by more tariff increases;
  3. Over a span of three weeks in October, worldwide equity markets took a beating, freaking out heads of state whose constituents had become addicted to soaring equity prices;
  4. During this week, the United States Government has frantically been creating reasons for people to get into stocks again including, cynically, seeking to dismantling some of the last regulations around the bank industry (since the poor dears have such a hard time of it);
  5. At the same time, Trump appears almost assured of losing power in the House of Representatives, so………
  6. Out of the clear blue sky, he announces that trade talks are going well, and that he’s not just going to meet briefly with Xi on November 30 but instead will meet AND have dinner with him (because God knows there’s no more appealing offer than the opportunity to watch Donald Trump eat);
  7. Thus, even with a complete catastrophe at AAPL, worldwide equity markets exploded higher in the middle of the night.

It’s all been fascinating and shocking to watch. Because, if you’ll forgive another enumerated list, you just KNOW there are a few guys in the United States who……….

  1. Went all in, YOLO style, with weekly QQQ puts on Thursday;
  2. Saw AAPL plunge, in an absolutely astonishing and virtually impossible event, dragging the NQ down with it;
  3. The aforementioned YOLO crowd had huge dollar signs in their eyes;
  4. They went to bed dreaming about the Ferrari they were going to pick out;
  5. And they’re going to wake up this morning and crap their trousers

So it has been an incredible ride (and I’m typing this super early in the morning, before the jobs report – -which was SUPPOSED to be the next big news – – has even come out!) In the span of just a few trading days, we’ve gone from

(1) an incredibly OVERSOLD condition with the VIX nearly at 30, with me covering two-thirds of my shorts, and – – God help us – –  me actually buying ETFS and suggesting specific long trades, to……..

(2) A VIX approaching the mid-teens, a Dow about 1400 points higher, and………..I’m going way out on a limb here…………probably the most excellent Second Bite At the Apple (metaphorically speaking, no AAPL) that I can remember.

Listen, I think this entire thing is a desperate ploy to hold the House and nothing more. I think the odds of Trump and Xi getting together and crafting a meaningful deal which, lo and behold, suddenly makes all right with the world again, are about the same as Harvey Weinstein winning the Most Classically Handsome Man in the World contest.

So strap yourselves in. Friday is going to really be something.

UPDATE – – It’s now about 6:11 in the morning. In the time since I wrote this early morning post, the rumors are already flying that Trump’s declaration were totally false, and the ES and NQ are round-tripping lower. I thought I was right, but I never thought I’d be proved right so swiftly. Score another one for the Slope of Hope, the only sensible place you can visit on the web.