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Fizzling Friday rally in Dow, S&P, reverses. China Syndrome again?

Written By | Jan 10, 2020

WASHINGTON – Declared firm in recent weeks, the alleged January 15 signing date of the Phase I US-China trade agreement apparently remains just that: alleged. As traders and investors pondered that  possibility, this morning’s already fizzling Friday rally in the Dow and S&P 500 quickly reversed. But not before the bulls took the Dow to another intraday record, pushing its top number above 29,000 points. Is the ongoing China Syndrome haunting stocks again?

Is the China Syndrome back haunting stocks again?

Via ZeroHedge, a Reuters article gleaned the following information on the topic from President Trump. They caught up with him while he was in Toledo, Ohio Wednesday evening for another huge, enthusiastic Trump Rally, his first of the New Year.

“In an interview with ABC TV affiliate in Toledo, Ohio, the president said, “We’re going to be signing on Jan. 15 – I think it will be [that date], but shortly thereafter, but I think Jan. 15 – a big deal with China.”

Recall my final remarks in Thursday’s investment column.

“See you tomorrow. There’s gotta be a correction in here somewhere.”

Maybe this is where the correction starts. Maybe the fizzling Friday rally today is just the preview.

More on what might be behind our fizzling Friday rally

China has habitually screwed the pooch on any trade agreement that might even slightly erode its ability to steal technologies and trade secrets from all manner of US companies as a price of doing business in the Chinese market. We call that the “China Syndrome,” borrowing the title from a now-vintage film that has little to do with this. (Because we like the way it sounds.)

The Chi-coms’ ability to preserve their carefully constructed and extensive roster of unfair trade practices vs. the US is also at the top of their list of things to resist.

One or two sources attribute the currently back-in-play signing date issue as nothing more than a few nuances hanging up completion of the agreement’s translation into Chinese. That could very well be true, as English and Chinese structures and expression are like night and day.

But I wouldn’t put it beneath the Chi-coms to make another last-minute effort to screw the pooch again on this deal. That would make this latest fake agreement signing ceremony seem like an instant replay of the earlier trade treaty iteration they walked out of at the last possible moment in Spring 2019. After penciling out most of the pro-US clauses they’d already agreed to earlier. That typical communist negotiating tactic sent the market into a brief but nasty tailspin. The China Syndrome is always a clear and present danger to fair trade, among other things.

Is China going to pull another Lucy vs. Charlie Brown football trick?

I’d expect something similar in the market if Beijing pulls another Lucy vs. Charlie Brown football trick this time around. Particularly after President Trump touted the “imminent” agreement to the massive crowd of fans that greeted him last night in Toledo.

The president is generally a lot more sure-footed, policy-wise, than his Deep State, Democrat, Eurocrat and media enemies ever like to give him credit for. But one thing I’ve noticed again and again after living in The Swamp for approaching 50 years is that getting anything significant out of a Commie at the negotiating table is

  1. More painful than pulling wisdom teeth with a rusty pair of pliers; and
  2. Likely to be violated early and often before the ink on the final agreement dries.

Which is why Ronald Reagan’s old adage – “Trust, but verify” – should be observed 24/7 in all such situations.

Deep background on Deep State machinations

Beijing, like many foreign governments, is in cahoots with the Deep State, globalist mass movement of wealthy tyrants and suck up politicians. They believe the reports from the captive MSM and US Democrats that Trump will be out of Washington next January. So why sign an agreement with this guy? In the US, this is a case of near-treasonous sabotage of US interests, largely by a single, outlaw party, the Democrats. But there it is.

All of which means that this president shouldn’t actually tout any agreement with China’s Marxist kleptocrats. At least until the damned thing is actually signed. (And watch out for that old disappearing ink trick.) That way, he can avoid getting embarrassed by yet another last-minute Chinese pullout.

Of course, nothing has transpired yet. But if Mr Market is smelling a rat on this one, we’d better be on the lookout. And we’d better be ready with our hedges on the short side. Otherwise, this and all future fizzled rally attempts, Friday or otherwise, could be seriously hazardous to our investing health.

“Stretch” Pelosi ready to transmit fake impeachment articles?

In other potentially market-moving news that could affect Mr Market soon, not to mention today’s fizzling Friday rally, we may be witnessing an epilogue soon to the corrupt, Pelosi-led House fake impeachment kabuki, according to a just-released report from CNBC.

“House Speaker Nancy Pelosi said Friday released new details about her plans for delivering two articles of impeachment against President Donald Trump to the Senate.

“‘I have asked Judiciary Committee Chairman Jerry Nadler to be prepared to bring to the Floor next week a resolution to appoint managers and transmit articles of impeachment to the Senate,’ Pelosi wrote to House colleagues.

“Pelosi, D-Calif., faces mounting pressure not only from Republicans, but increasingly from fellow Democrats, to deliver the articles, which would then permit the Senate to begin preparations for a trial.”

Cartoon by Garrison. Link:

Was investing always this politically complicated?

This is all pure, rotten, left-wing politics as distilled for public consumption. That said, the eventual “trial” in the Senate will continue to hang over stocks. The foul odor of this chicanery will pollute the political air as long as the nonsense winds on.

BTW, after Trump’s likely acquittal, watch for the Democrats to launch yet another pre-developed anti-Trump stunt to prevent the president from governing for the rest of his term.

Not to mention setting the table for their new “insurance policy.”

Namely, flipping the Senate to the Democrats while keeping the House in 2021. The better to thwart more conservative judiciary appointments that would erode the US Court Systems’ still strong “living Constitution” bias.

This is going to be a hell of a year. I hope that by the end of it. I hope we still have a functioning government. And that at least a few American cities are still standing after the post-election riots. And still have a viable stock market in which to invest.

Get those hedges ready. Another edition of the China Syndrome may await investors.

But otherwise, try to have a good weekend.

– Headline image: The bears are having fun on Wall Street again, just like they did in this 1907 cartoon.
(Via Wikipedia entry on Bear Market. Public domain.)


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