—-For months, we have had the same thoughts on the China trade issue.—-
—-All evidence in, China is not just going to lie down and play dead.—-
—-China does not have elections.—-
—-The Chinese government are bad players but tariffs are not the answer. Vigorous negotiations outlining the benefits of free trade is a part of the answer.—-
—-Tariffs are paid by the importer and often passed on to the consumer. (Regardless of what the president and Navarro tell you!) If tariffs are so marvelous, why did the president use $28 billion of our tax dollars to pay off the farmers? Tariffs suck!—-
—-Continued back and forth on tariffs creates instability and uncertainty. There is just no way businesses can plan on supply, demand, man power,  expenses, profits or the next day as the president has changed his mind too many times.—-
—–While many here as well as the administration believe China is the weaker country, the problem is that its not what we think, it’s what they think.—-
—-China must cut a deal. NOT!—-
—-We do not want to get to the point where a certain middle finger is shot back.—-
—–First, China has been reported to ask state buyers to halt U.S. agriculture imports,—–
—-Futures are getting smoked this morning as foreign markets lead the way down. The yuan broke 7 as China let their currency float down even though China says they have no interest in using their currency as a trade deal. Yeah, that’s the ticket! 7 is a key psychological level. No one expected the latest trade talks to bear fruit just yet but no one, including markets, expected President Trump to again change his stance by hitting China with a 10% tariff on everything under the sun. We do not think it is the 10% that is causing the problems. We think it is the uncertainty of minds being changed as the wind blows. By the way, this goes for both sides. We also suspect this move is to take the ever escalating Hong Kong situation off the front pages as nothing good is happening over there right now.—-
—-And now the president is out this morning slamming the move out of China.—-
—-We suspect you are going to hear some rumblings out of the Eccles building if markets continue to swoon. You know what that means? Another rate cut, possibly before the next meeting? We also have to believe the great market watcher in chief is going to think twice as every 100 Dow points will matter come November 3, 2020. Watch for the rumblings of another pivot.—-
—-Big-cap major indices will open markedly below the all-important 50 day moving average. Before this latest episode, many areas around the globe were already fragile. Fragile just became more fragile.We take no solace in telling you this is some real serious s–t! After all, it’s only the two largest economies in the world totaling close to $35 trillion. Lastly, there continues to be a ton of leverage and a gargantuan one-sided trade out there. You know what that potentially means!—–
3 replies
  1. Avatar
    Victor Cardinali says:

    Gary, I respect you and every thing you say, I’m also grateful to have listened and acted on what you teach… to read the signs the market gives us. You Sir taught me that. I got out of the market two weeks ago. Not because of bad news or good news but because of the frost and the weak volume, and because of the signs you always talk about. I’m very far from being as savvy on the subject and I know how you feel about meddling by the government and understand the damage to people in the market that need that money for their retirement. The tariffs are not going away and we must all stand together to make America Great Agai! I know it’s a slogan but people having the chance to work and earn a living has a price. I will suffer with the rest and support our President until he shows that he doesn’t put our interest first and foremost. I say hang on because this is going to be a bumpy ride until after the election. The only reason the rest of the work doesn’t alienate us is because of our we buy most of their stuff with no tariffs. So let the other Countries that would benefit and not tariff us to get the advantages of our society and screw the Socialists dictatorships of the rest of the world. In my humble view… let them eat TARIFFS! Thank you for your teaching and hope more people could listen to you. Sincerely, long time listener. Victor

  2. Avatar
    Wisdom Seeker says:

    If tariffs were really having a significant impact on consumers, wouldn’t CPI inflation be higher? And if they were impacting businesses, wouldn’t profits and stock prices be lower?

    Why is it that tariffs on foreign goods are such a bad idea for the US, while everyone else has them against US-made goods? There’s a good argument for lower tariffs everywhere, but bilaterally there’s a much stronger argument for tariff parity and a level playing field.

    If China refuses to follow international norms on trade, persistently dumps goods to destroy competition and steal market share, and generally abuses the system, surely something must be done, and talking nicely to them about benefits of fair trade is foolish when they are already reaping excess benefits at the expense of others.

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