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Preface from Tim Knight: just to be really clear, this is a contribution from an outside writer, and is neither my piece nor my opinion.
As the media highlights the potential impeachment process in the coming weeks, many are so concerned that this will be the “cause” of the market drop we are expecting. Yet, history suggests otherwise.
The narrative will certainly play out as follows: The market likes certainty and stability within our government. (Please ignore that this was the same reason many claimed that the market was going to crash if Trump was elected – yet we were pounding the table in expectations of a large rally). However, an impeachment proceeding places us into a very uncertain and unstable situation within our government. Therefore, the market will react negatively to that uncertainty.
The pundits and the media were debating for several weeks leading up to the last Fed meeting about what the Fed was going to do and the effect they thought it would have on the market. And, it amazes that the great majority of the market does not realize how much of a waste of time these debates really are.
But, as I often note, many market participants and analysts are simply not burdened by the facts. If they really would review the facts of market history, they would learn that there is no one that can control the market. PERIOD.
A few days of weakness, and the world was ready to declare the 40-year bull market in bonds to be over. Not so fast! My view is that this touch of weakness simply sealed up a price gap, and now we’re starting to get some strength again. The big day is exactly two weeks from today – July 31, the last day of this month, when the Fed does their thing.
There is an absolute shocked silence here in Taiwan. The Taiwanese have just seen an American president kow-tow to a Chinese emperor. Not since the Ming dynasty has China been able to dictate terms of trade to the USA.
If the US president is willing to sell out his own people to the Chinese communists, what hope does Taiwan have of the USA coming to defend democracy on the doorstep of communist China?
This is a pivotal moment in history. Pax Americana is over.