So, it’s 9:09 Saturday morning in Osaka Japan, as I type, and there’s this big meeting between presidents Trump and Xi happening sometime today. Its implications for financial markets are, well, big!
Based on my view of how the market traded this week, today in particular, traders fully expect that the two leaders will emerge from the meeting all smiles and optimistic on the prospects for a win/win trade deal occurring some time in the not-too-distant future. The bigger the smiles, the grander the optimism, and the shorter the time frame (if one’s offered) the more the stock market will like it come Monday morning.
This morning Trump tweeted the following:
“That big Stock Market increase must be credited to me.”
So, yeah, while he was mum on the market during the recent worst December for stocks since the Smoot Hawley Tariff Act of the Great Depression (I kid you not!), the U.S. President pays very close attention to the market, and chalks the ups up to his presidential prowess. Thus, while China is not nearly as willing as it was when both sides were on the cusp of a deal just a few weeks ago — i.e., they now have demands that the U.S. had previously demanded against — well, let’s put it this way, for the market to side with Trump come 2020 election time, he’s going to have to put the trade war to bed before the forecasts of many a non-politically-captured economist and U.S. business exec come to fruition; that is, a recession in less than a year if he doesn’t!
So, sure, traders have every right to assume a truce emerges some time today, with, again, the promise of a great deal to ultimately follow. But, of course, with the market presently resting just shy of all time highs — and given China’s less-conciliatory posture — Trump walking away and teeing up more tariffs is far from out of the question. In which case Monday’s stock market will deliver its worst trading day of the year, I highly suspect.
If indeed the latter were to occur, I’m here to tell you, do not panic, for I can virtually assure you, Trump will! Again, for him, the stock market is akin to a report card on his presidency; a crash will have him clamoring for a deal, and soon, you can absolutely bet on it!
Watch this video:
And have a great weekend!