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5 Aug 2019

OVERNIGHT NAUSEA

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Post by MoneyRadio Staff

BY GARY KALTBAUM- AUGUST 5, 2019

—-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.—-
—-OVERNIGHT, THE FIRST MIDDLE FINGER WAS INDEED, SHOT BACK.—-
—–First, China has been reported to ask state buyers to halt U.S. agriculture imports,—–
—-And:—-
—-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!—–