Quotes of the Day: “A Cacophony Of Noise”

In Friday’s post I suggested that nothing consequential occurred last week with regard to trade negotiations with China. In their morning message Bespoke Investment Group pretty well spells it out: 

emphasis mine…

“Chinese sources refused to call this a “deal” and appeared to play down expectations with little fanfare in state media over the weekend; some details of the “deal” have not been confirmed officially by China, either. This morning, Bloomberg is reporting that China wants further talks to confirms certain aspects the White House claims they got the Chinese to agree to.

Even if the deal is in place, the idea that it represents major progress is a stretch. First, concessions from China are negligible: ag exports have taken such a large hit that returning to the status quo represents a huge increase in Chinese buying. Therefore, commitments to do so shouldn’t be taken as a major concession, while the other details reported in the press appear to lack enough detail to be worthwhile in terms of progress. National security issues like Huawei are, of course, not dealt with, let alone larger and fuzzier aspects of the US-China relationship like Chinese territorial aggression in the South China Sea, Hong Kong, or the cultural genocide of Uighurs in Xinjiang (an issue that has already led to specific US sanctions on some Chinese companies). And, obviously, even all of that doesn’t include the real driver (as far as we can tell) of the President’s animosity towards China: the massive US trade deficit in manufactured goods.

As always with
trade, markets are enamored with every single headline or story related to the discussions. It creates a
cacophony of noise that is almost impossible to see through for real issues driving equity prices and
other global financial markets.”

While I hugely sympathize with the final paragraph above, in terms “a cacophony of noise”, I would argue that it can indeed be seen through by intently focusing on the data, as opposed to the short-term gyrations in financial markets. 

Like Jesse Livermore once said:

“I can’t tell you how it came to take me so many years to learn that instead of placing piking bets on what the next few quotations were going to be, my game was to anticipate what was going to happen in a big way.”


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