Well, well, well. Precisely as I predicted (which was a ridiculously easy prediction), Bessent has reported Nothing But Good News from his weekend tete-a-tete with China. Seriously, what else is going to say? That there’s no way in hell he’d ever want to cut a deal with these scoundrels? Of course not. It’s all going to be peaches and cream. Thus:
If one bothers to read past the headline, however, and if you know how to read between the lines of this kind of puffery, it soon becomes clear that of course there’s no deal (Bessent himself already said such a thing would take literally years to really hammer out) but just a general understanding that they’ll keep talking and won’t try to kill each other in the meanwhile.
HELP us WORK TOWARD a resolution. Exactly.
If you’re expecting to see a full-blown resolution with all the details tomorrow, forget about it.
None of this matters, though, because the bulls are manning up all over themselves. Here’s a very tiny taste:
Now don’t get me wrong. The bears are probably going to get punched in the face at least medium-hard with the opening bell (as of this writing, I do not know when the big “reveal” is going to be Monday, whether it’s before the open or not, and obviously that reveal is going to make a very big difference).
But let me say here and now that what the bears DESPERATELY need right now is for the world to move past the “oh boy oh boy oh boy a deal with China” craziness and start to realize that it’s going to be a long time before any meaningful difference comes about.
I’m composing this post a little over half an hour after the opening bell, which I want to emphasize because who knows what things will look like by the time you, dear reader, actually are reading this.
The US dollar is ripping higher (USD/JPY):
Whereas gold, as a “safe haven”, is taking a tumble:
The above two charts are based on minute bars, but for equities, I want to keep the big picture in mind, so I’m switching to weekly charts now.
On the /ES, we’re up about 1%, but it is still nowhere close to violating the all-important March 25 peak.
The /RTY is up stronger, about 1.25%, but also a very safe distance from the March 25th failsafe.
The most “dangerous” market is tech, the /NQ, which is pretty close to violating the “lower highs” sequence we’ve seen.
As for crude oil, I think we’re still in great shape here. Even with this ostensibly huge news, the /CL futures are up a mere half percent, and the very long-term weakening is continuing apace.
We’ll be in a radically different environment by the end of the trading day Monday. If the “reveal” is warmly accepted, and we blast higher all day, closing near highs, the entire bearish case might be on ice for weeks, if not months, to come.
On the other hand, if this turns out to be a Nothing-Burger or, even better, a sell-the-news event, the bulls are going to be in an exceptionally vulnerable position.
For the immediate moment, we’re seeing a bit of fade already, but again, whenever this big “reveal” happens, and the market’s reaction to it, will tell the tale.
Good luck to us all! We’re going to need it.
