When this week began, I mentioned there were going to be three big “events” over the next nine days. First, the announcement from the US/China trade talks; second, the CPI report (coming out tomorrow morning before the open), and third, the FOMC Kabuki Theatre next Wednesday. Of these three, it was the first one that had me by far the most worried. Thus, when I saw the equity futures start gyrating wildly, I rushed back to my computer to see what the news was. And…………..
The market ripped higher. Then stalled. Then fell. Then ripped higher again. Then – – well – – at least for now, this is what I’m seeing………….
First off, why was I so worried?
Simple. I’ve got a Baskin-Robbins 31 flavors of PTSD over what’s transpired ever since April 7th, so I’m almost afraid of my own shadow. Specific to the US/China stuff, the last time any kind of progress was announced, the markets exploded higher for days. The /NQ alone was up something like 1500 points. So, I was understandably tense.
Yet this time, the market is just farting into the wind. It’s like it doesn’t matter.
And why would that be? Simple. Because it doesn’t matter. For all the millions of dollars the US spent for Bennett and his beautifully coiffed hair to fly overseas and hold a two-day hardcore negotiating session, it all resulted in absolutely dick.
I’m not exaggerating. The ONLY thing they announced was that, yep, they sure do agree to the terms that they agreed to the last time they met, and so long as their leadership approved of this framework, well, by gum, they’d just start talking some more.
You betcha. Oh, and they’re going to give China yet another 90 days to figure this crap out.
Calling this a nothing-burger would be an insult to burgers everywhere.
When the news of this first hit, I left a comment, and I got this response:
Time Kills All Deals. A-freakin‘-men to that! I had never heard that expression, but that should be chiseled into stone on every street corner in America.
When I was growing Prophet.net, I often noted that the only good deals that happened were those that happened swiftly, which is just another way of saying what Maxx said above.
The reason seems pretty clear: if two parties want to make a deal, and they’re fairly close on terms, it won’t take long for them to hammer it out and get ‘er done. Why would they mess around, dilly-dally, and delay? They both want to move forward! So………...they do it!
On the other hand, if you have two side which are pretty much destined to NEVER get a real deal put together, and yet they have to keep the simulacrum of negotiating going for political purposes, they can meet, re-meet, issue press releases, re-re-meet, pose for pretty photos, and basically dick around until the cows come home.
What’s especially amusing is that the U.S. negotiation excitedly declared that they would ultimately work out a way for MORE trade from China, which, umm, is exactly the opposite of what they said they wanted, right? I mean, after all, wasn’t there this LSD-induced fantasy of manufacturing coming back to America and turning our back on China?
Oh, wait, sorry. I forgot who our leader was. TACO. Got it. Never mind.
In any case, now we can turn all our attention to the CPI, since this whole US/China thing has become nothing more than a running gag. By the opening bell Wednesday, it should be clear if the bulls are going to run roughshod (even MORE roughshod, actually) over the bears, or if the bears actually can turn this sucker around.
The thing is that index after index is at a crucial juncture, with a particularly good example being the semiconductor index, shown below. If we turn south, it will be a jaw-droppingly, pitch-perfect, technically ideal reversal away from resistance.
Otherwise…………..the bears will need to borrow the white flag that the U.S. trade negotiating team has been using so much lately.
