This Morning’s Log Entry

Chinese equities bucked the trend last night by not following Wall Street’s lead lower; the Shanghai and Shenzhen indexes closed up .9% and 2.2% respectively. New fiscal and monetary stimulus, along with the promise of a trade truce, is inspiring a risk-on mood in China.

As for the U.S., mixed messages on trade from Washington has equity traders guarded after a strong rebound off of the 12/24 lows: Worries over how the U.S. will approach Europe weighs heavily, and Trump’s Monday decision to revoke India’s and Turkey’s preferential trade status is – to say the least – not inspiring confidence.

The growing sell-the-China-trade-deal-announcement sentiment is on the mark if indeed the White House does not – after finalizing the China trade deal – soften its tone with the rest of the world! If it does, however, soften (or, at a minimum, does not harden), the shorts betting on a selloff will serve to exacerbate the upside as they run for cover on the attendant strong market rally…


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