Stay calm. All is well in the markets.
Remember this time last year Trump unleashed a massive tax cut.
The tax cuts are what sparked the sugar rush of spending to this day.
But things aren’t as powerful anymore on a year-over-year (yr/yr) perspective.
Add in the blowback from tariffs and a whiff of uncertainty enters the picture… and you get the deep, dark red in your portfolio.
As I said last week:
At this point, the market will bounce up or down depending on the latest trade war news item. The market is hostage to the trade war. Trump is playing hardball. He started the fight and must see it through.
The market clearly wants a deal to get made. News of Trump willing to meet with Chinese President Xi sent stocks up. Then signs of an impasse brought it right back down.
Now the story is fear the Fed will make a policy mistake. One it’s done over and over: raise rates into an economic slowdown. For example, I was wrong about inflation: CPI was pretty mild. Although the producer’s inflation rose (PPI).
Nervousness is not something the market handles well. And we’re in the middle of absolute uncertainty today.
I am changing my near-term read of things.
I no longer expect China to blink this month.
I expected some movement post-midterms. I believed China would wait in order to calibrate their response to how Trump emerged.
I rightly predicted that he would emerge unfettered. Nevertheless, China is standing firm.
I can’t tell how much is just playing to the audience and how much is real positioning.
If it’s positioning, then they are making serious policy errors because it means they continue to misread Trump’s willingness to go to the full distance. Which means the trade war gets dragged out into February.
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Bitcoin’s fading promise
Cash is not a bad move. Or gold. Same thing.
But not Bitcoin (BTC).
BTC fell to a 12 month low – now at just under $4,400. All the other cryptos got crushed too. But what does this all mean?
