Displaying items by tag: trade war

(New York)

The S&P 500 just recently emerged from its longest correction period in over 30 years. The big question is what will it do next. Well, there are a number of key issues/events that could either send it tumbling again, or push it higher. Three are easy to see on a timeline: this Friday’s jobs report, a Fed policy meeting, and another week of corporate earnings (140 companies in the S&P 500). There is also the looming trade war/tariff issue that could threaten the market, or support it, at any time.

FINSUM: Look out for the jobs report this Friday. There is going to be very high expectations, and if things don’t go as planned, the market could have a seriously adverse reaction.

(New York)

The Wall Street Journal has put out an article painting an interesting, and perhaps realistic, view of how the trade war might play out. Their argument is essentially that the market itself will stop any trade war from becoming too serious. The WSJ says it best, “If the Trump trade war starts to squeeze economic growth, markets will react badly. When this happens, the impatient American president will have no choice but to declare victory, call off the war, and limit the damage”.

FINSUM: We tend to think this view is probably correct. That said, these kind of tariff wars can have unintended consequences that could make the damage more extensive and permanent than it is currently easy to foresee.

(Washington)

The whole market has been waiting on today’s GDP report for weeks, and this morning it finally hit the tape. With so much anxiety about the possible impact of a trade war, coupled with the expectation that the tax cut gave the economy a big boost, it is hard to remember a time when a GDP report was more relevant. Well, the figure is in, and it is a winner—the US economy expanded at 4.1% in the second quarter.

FINSUM: This is a great number, but the issue is that it takes very little of the most recent developments—trade tensions—into a account because it is for the second quarter only. We imagine the third quarter GDP figure will be even more important.

(Washington)

President Trump may have just ended a major part of the current trade war. All eyes have been focused on the President’s meeting with European Commission head Juncker today in Washington, an encounter that could spark trade fireworks between the US and EU. Most have said they have little hope of a positive outcome. Now, that might be entirely changed as the president last night tweeted out what must be the most hopeful statement of the whole trade war. He said “The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them … Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!”.

FINSUM: It would be absolutely amazing to go from an escalating trade war to a US-EU free trade panacea. It seems unlikely to happen, but it could be a positive sign of collaboration.

(Washington)

The trade war appears to be headed down a poor path ever more quickly, and in response, global stocks are seeing losses. The US is continuing to make threats about ever larger tariffs on its trading partners, and Trump is poised for a tense meeting with European Commission head Juncker in Washington today. The president yesterday referred to tariffs as the “greatest”, and the US put forth a $12 bn support package for American farmers hurt by tariffs.

FINSUM: Stocks don’t know what to do, as this trade war is growing increasingly difficult to handicap. Add to that the uncertain over global central bank policy, and we have a very nervy mix for markets.