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It all seems a little too contrived. On May 30, we got word that Mexico was going to get nailed with big tariffs unless they do something about the illegal aliens crossing our southern border. And then, just eight days later – – problem solved! Trump announces Mexico has made a deal, there will be no tariffs, and we can just dump aliens back across the border with Mexico’s pledge to “feed, house, and educate” them.
Wow, THAT was easy!
In any case, it’ll be more than a little interesting to see what the ES and NQ do on Sunday evening. It’ll be even more interesting to see what the actual markets do on Monday. Will markets explode higher on this suspiciously good news, or will they inexplicably slump? We’ll know soon enough.
I wrote this article for the Opening Notes segment of this week’s Notes From the Rabbit Hole. At the end of the post is a really interesting interview with Peter Atwater sent to me by pal and subscriber Michael Pollaro that you should do yourself the favor of listening to. It’s pretty far reaching, but I think Michael sent it to me because it eloquently expands on the subjects (Trade War & the Fed) introduced below and a lot more. The stuff about Nationalism and the stock market’s vulnerabilities are must listen.
There is nothing new under the sun. As Donald Trump goes about the 1970s playbook (on steroids) the economic world is shifting in ways that will be impossible to quantify ahead of time.
The amazing thing is that neither Trump nor the American people know what they want from the trade war. China knows exactly what it wants and needs.
Trump seems to want “even” trade with China. Both countries export/import the exact same amount from each other.
The American people want jobs. Trump’s “even” trade goal won’t help that. Reduction in Chinese imports will be filled completely by new trade with: Korea, Taiwan, Vietnam and Thailand. It will all be more expensive to the American consumer than trade with China because Korea, Taiwan, Vietnam and Thailand are all more expensive than China (but vastly and by American standards, incomprehensibly cheaper than any American manufacturing).
Well, we’ve gone from the ridiculous to the sublime. At the midst of the China/US negotiation insanity, the latest gambit by the U.S. is to increase tariffs (literally hours away at this point) but NOT on goods already in transit. Evidently, this gives them a few more weeks of breathing room as the cargo vessels groan their way over the Pacific.
I daresay the next ploy will be to demand the ships cut their speed to 5 knots so that even more time is allowed. It’s all become a comic farce at this point. We’ve only had three days of trading so far this week, but it feels like a month or two.
Welcome to a new day of suspense. I was reading this article last night, and it suggested an 85% chance that the threat of big new tariffs was a total bluff. Indeed, the likelihood of the “risk off” kind of event that would thrill me is a mere 15%.