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China trade deal elusive. Confused investors dump stocks, then do a 180

Written By | May 17, 2019
China trade, confused investors, critical thinking

Image via Public domain. CC 0.0 license.

WASHINGTON.  As duly referenced in Thursday’s column, US stocks continue to meander decisively in Friday trading action. This despite the fact that a China trade deal remains as elusive as ever. But ignoring this background terror, confused investors decided to party hearty anyway on Thursday. They gave the Dow a nice boost, supported by positive US economic reports according to the Tylers at ZeroHedge.

“Sentiment on Thursday was briefly, if erroneously soothed by better U.S. economic news, with housing starts surprisingly strong and a welcome pickup in the Philadelphia Federal Reserve’s manufacturing survey. Upbeat results from Walmart burnished the outlook for retail spending, though the chain also warned that tariffs would raise prices for U.S. consumers.”

But, yes, of course, those tariffs. Confused investors and traders alike were spooked enough Friday to drive the Dow down roughly 200 points. But that happened before they mounted a feeble version of Thursday’s massive upside reversal. Who knows where this market eventually closes today?

China trade deal: More political than monetary. Result: Confused investors

Why do the Chinese continue to fight Trump’s most crucial demands tooth and nail? Mainly because any agreement that’s close to US terms would definitively screw Chairman Xi’s plans for world dominance by 2025. The Chi-coms want to keep stealing our technical and industrial know-how until we lose our lead in these areas. Forever.

The Tylers elaborate on the elusive effects of the perpetually China trade deal that has yet to happen.

“After yesterday’s bizarre, gamma-chasing rally, the week was set to close in a sea of red as world markets suffered a fresh bout of risk aversion on Friday after China doused hopes for a quick deal when its state media signaled a lack of interest in resuming trade talks with the U.S. under the current threat to escalate tariffs, while the government said stimulus will be stepped up to buttress the domestic economy. Meanwhile bets on a new pro-Brexit leader in Britain whipped the pound towards its worst week since October.”

(BOLD  text via ZeroHedge.)

Jim Cramer actually gets Trump. So do at least some Democrats

Over at CNBC, Jim Cramer continues to fire away on the perpetually elusive China trade deal issue with all cylinders. A stubborn, lifelong New York Democrat, Cramer isn’t always a fan of President Trump. But he gets the President in a way that many of his fellow CNBC analysts – and numerous American corporate CEOs – who actively oppose him do not.

“Cramer on Friday said, ‘Why is everyone so confused by these [China moves from Trump]? I don’t think he could be more clear. He’s saying, “Listen, I’m not going to do what the previous presidents have done.”

“‘Trump doesn’t want American companies to do business with China,’ the ‘Mad Money’ host added. ‘Trump doesn’t want any sort of effort that makes China militarily better, that makes them ahead of us in terms of 5G,’ the next generation wireless technology.”

Gosh, a real, non-wimpy, pro-American US President. Who knew? Most tech titans are actually on-board with Trump (but quietly). Even though they’re currently getting hurt by this dispute, they’re fully aware that most of the Chinese intransigence is based on the Chi-coms’ desire to continue stealing Silicon Valley’s technological breakthroughs until there aren’t any more to steal.

Quite surprisingly, many Congressional Democrats, including Senate Minority Leader Chuck Schumer, back Trump on this issue. Confused investors remain ambivalent, only seeing the dangers involved in taking a stand.

Steel and aluminum tariffs vs. Mexico and Canada might actually disappear

What seems to have balanced things Friday after the market’s opening swan dive was potential good news on an almost forgotten tariff front.

“The United States has reached a deal to lift steel and aluminum tariffs on Canada and Mexico, removing one key obstacle to passing updates to the North American Free Trade Agreement, two people familiar with the matter told CNBC.

“The U.S. could announce an agreement to scrap the duties as soon as Friday, the sources said. It is unclear whether the U.S. will put import quotas or other measures in place as part of the deal to remove tariffs.”

US steel stocks wobbled a bit to the downside on this news. But Cleveland Cliffs (trading symbol: CLF), which mines and markets partially purified iron ore in the form of taconite pellets, advanced a couple of cents on the news, likely because they’d sell more of the stuff to both of our neighbors. We’ll just need to see where this goes.

Blue States would rather virtue-signal than serve their constituents

While dynamism both good and bad continues to unfold on the international trade front, it’s just “same old, same old” when it comes to the high cost and utter futility of Blue State energy and business policies. Case in point: New York State’s resident Idiocracy in Albany, as reported over at

“In an unsurprising move, the New York state authorities rejected a proposal for a new natural gas pipeline that would have supplied 400 million cu ft of natural gas daily to the state where energy demand is growing, but so is fossil fuel opposition on the highest political level.”

“Reuters quotes the New York Department of Environmental Conservation as saying in its reasons for the rejection of the Williams project that:

“Construction of the proposed project would result in significant water quality impacts from the re-suspension of sediments and other contaminants, including mercury and copper.”

Since New York is one of America’s oldest states, we have to wonder whether they’re showing the same concern over the undoubted thousands of miles of lead pipes that channel drinking water to the inhabitants of the state’s oldest industrial cities.

Not much available virtue-signaling in that issue, however. Plus, it might cost plenty of dollars to remedy this undoubted, serious issue. Alas, that could limit the amount of graft New York legislators typically hang out to their relatives and wealthy supporters.

Our Friday column wrap

As we wrap this column up, circa 2 p.m. ET Friday, the feeble Dow rally continues feebly. It probably stands to reason, given Thursday’s outburst of unsupported irrational exuberance. Markets still remain essentially in a neutral, skeptical, and somewhat fearful mode. As a result, this writer remains just one of many very confused investors across the fruited plain.

On the macro-front, any possibility of a US / China trade deal continues to remain elusive, probably indefinitely at this point. So we’ll just stand pat in our portfolios today, while defensively trimming what little Chinese stock exposure we have. Then we’ll just keep an eye on what transpires in matters political over the weekend. Whatever happens, we can’t address it until Monday anyway. But we could see a nasty downturn at a moment’s notice if something, anything goes awry.

Have a good weekend.

— Headline image: Confused thoughts. Image via Public domain. CC 0.0 license.


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17