It would seem by dark cynicism last night about the unimportance of the big trade news was well-founded. As always, this is about context. In a normal, rational market, a United States President openly declaring a trade war on the biggest economy on the planet and ratcheting it up with tariffs on $200 billion in goods would be a LIMIT-DOWN situation (followed by similar limit-down days, day after day, until he backpedaled). In this insane asylum, however, the NQ has already bounced 50 points off its panic low, and the ES is cheerfully healing itself.
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If you read most of the analysis being published over the last two days, you would almost assume that the S&P500 should be crashing or be in a bear market. Yet, we are only 4% off the all-time highs struck early this year in the S&P, whereas the Nasdaq and Russell have made new higher highs this summer.
In fact, if you had read the analysis put out over the last two days when further tariffs went into effect, you would have to assume that Friday should have been a major down day in the US markets. This is just an excerpt from a bearish author’s recent article on the US market:
“Virtually all of the market headlines this week centered around the Friday imposition of tariffs by the U.S. on $34 billion in Chinese goods and the immediate reciprocation from Beijing. The duties kicked in at one minute after midnight and marked the most serious escalation yet in the burgeoning global trade war.”
My entire synopsis of the U.S. political landscape couldn’t be simpler: as long as the economy appears strong, and as long as there are plenty of jobs, Trump will rule the roost. Period. End of story.
The MOMENT………and I mean, the MOMENT………the economy is clearly faltering, he and his cronies are going to be thrown out on their ear (and stop having the right to grab the nation’s attention by tweeting stupid shit about the quality of the paint job on the Red Hen restaurant, for the love of God). But until then……….he is the MAN, no matter what people say. It’s the economy, stupid. No, no, more than that. It’s the economy, you idiot. End of story. END. OF. STORY.
Until then, I find this hilarious and chilling:
Well, everyone on the planet is talking about Melania’s jacket:
A NO-WIN FOREIGN POLICY
It’s clear that President Trump’s “America First” policy does not produce a “win-win” outcome for it and other world trading partners…at least, it has not been proven, yet.
So far, he’s only been successful in tearing up prior agreements related to the Trans Pacific Partnership, the Paris Climate Agreement, the Iran JCPOA, and has threatened to tear up the NAFTA with Canada and Mexico.
Although he is in current trade talks with China, he has not been successful in negotiating a new trade agreement with Canada and Mexico, nor has he been successful in negotiating any other bi-lateral or multi-lateral agreement that I’m aware of, including a peace agreement between Israel and the Palestinians.
In fact, he has exacerbated tensions in current NAFTA negotiations by slapping hefty and punitive steel and aluminum tariffs on these two closest trading allies, as well as on the European Union…under the guise of “national security” concerns. (more…)
As economic benefits of last year’s Tax Cuts and Jobs Act begin to filter into the US economy, the S&P 500 Index appears to be headed towards a retest of its all-time high of 2872.87 set in January of this year, as shown on the monthly chart below. This record high was accompanied by an all-time momentum (MOM) high, as well…hinting of further strength ahead at some point on this timeframe.
It has broken above what was near-term resistance of 2680 (as I described in my post of May 4).
Watch for a break and hold above its next major resistance level (top of long-term uptrending channel) at 2750. Otherwise, a break and hold below 2680 could see price retest its next support level of 2620, or lower.
About a week ago, tens of millions of thick printed election information guides were mailed to every household in California, including mine. I have no idea what it costs the state to create this thing, but I suspect something approaching a hundred million dollars. The purpose of these things is, ostensibly, for people to carefully study the propositions on the June ballot as well as the candidates for the various government posts (Federal Senator, California Governor, Treasurer, and so forth).
California is a famously progressive state, but thumbing through this book, I am always struck by some of the – – shall we say – – more fringe candidate that somehow have made their way into this publicly-funded publication. Here are a few………..
We begin with Jerry Laws, whose entire platform and campaign for the Senate can be expressed in merely a single word: (more…)
During yesterday morning’s pointless run-up in valuations, I remarked how I wasn’t concerned, because the broader trend was with the bears. Likewise, with this morning’s smack-down, I’m not dancing on the table with glee, because it’s just another knee-jerk response to what now seems like a daly tit-for-tat response between China and the U.S. As I keep saying, it’s all about February 9’s lows. We need to break them and close beneath them to get cookin’.
It has in the past been “the financial crisis”, “the Euro crisis”, “Greek debt”, “Italian banks”, “the fiscal cliff”, “Brexit” and so on. Every one of those events an extension of Keynesianism and its debt-leveraged monetary magic tricks. But now the buzz phrase is “trade war”, a different kind of animal.
The brewing trade war with China is different. With every damn one of the events noted above we here in the anti-hype environs of nftrh.com (and before it, biiwii.com) have tried to maintain perspective about why it was occurring (Thing 1, which we had anticipated in essence if not in the exact way it played out) or why they would not prove long-term bearish or bring on the end of the world (Things 2-6). [Editor’s Note: at first glance, I thought this was a Biblical citation, until I realized there was not a book of Things, at least not in the King James Version to which I am accustomed. – Tim]
Indeed, we often note that inflammatory market events prove most often to be sentiment resets and buying opportunities as the herd pukes up its asset holdings. Keynesianism after all, has an elasticity to it despite its obvious and one day terminal faults. The elastic keeps stretching to this day. (more…)