Home About Archives RSS Feed

@theMarket: Will China Be Next?

By Bill Schmick
iBerkshires columnist
After this week's trade deal between the U.S., Mexico, and Canada, investors are waiting to see if China will now come to the table. What would it take for that to happen?
Mid-term elections could be the trigger. It wouldn't surprise me to see a deal before November — since the polls appear to favor the Democrats. Trump's tariff offensives, while supported by most of his base, are deeply disturbing to those who are feeling the brunt of foreign-trade retaliation.
Farmers, for example, and blue-collar workers in certain steel-related industries, are suffering. Many of them are also part of the 39 percent minority of Americans who support Donald Trump and his presidency. These predominantly white, uneducated voters might be swayed to vote against the GOP because of these tariff issues. That could mean a drubbing for the "Grand Ole Party" come November.  
A deal with China, even one that does little but save face, might be preferable to the president and his party than a big loss in the election booths. If one examines the successful deals the president and his men have negotiated thus far, we see some minor changes in the trade terms, but certainly not the massive overhaul in trade terms we have been promised practically every day for well over two years.
Minor fiddling around with auto manufacturing content and $40 million worth of reductions in Canadian barriers to milk imports (think American farm voters) is not a major overhaul of NAFTA. We have essentially cosmetic changes similar to those announced last week as part of the South Korea/U.S. trade agreement. 
It appears to me that we are simply witnessing a continuation of Trump's U.S. foreign policy of "Speak loudly but carry a tiny stick." Why should we not expect the same treatment in our on-going negotiations with China, as well as the European Community? A similar deal with China would have little to no impact on our terms of trade but would allow Trump to claim he has "solved our trade problems." It might also improve Republican chances in November.
As for the market's reaction, we celebrated with all the indexes soaring at the open on Monday. The S&P 500 Index, at one point, was just five points away from making a new all-time high. The Dow Jones Industrial Average did make a new high on Tuesday and another one on Wednesday. The other indexes were more subdued as investors sorted through the potential winners and losers of Trump's new U.S.-Mexico-Canada Agreement (USMCA).
Taking a 30,000-foot view of the markets, what I see are positive returns for six straight months. If we look back to 1928, there have only been 26 prior six-month periods with that kind of winning streak. In the month that followed these events, the S&P averaged a gain of 0.95 percent with positive returns 69 percent of the time.
Over the following three months, the index averaged a 3.92 percent gain with positive returns 85 percent of the time. There have been only five prior streaks where the index was up in each month from April through September. In those instances, the average gains were even better.
Next week, we begin the quarterly beauty pageant of earnings results for this year's third quarter. Depending on the results, we could see a continuation of the rally and a slow grind higher or, if earnings are disappointing, a sharp, short, pullback, so strap in and get ready.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Oasis Liquor Store in Adams Under New Management
Zoning Bylaw Likely to Engender Debate at Williamstown Town Meeting
New Principal Named for Mount Everett Regional
Rabasco Wins Steel Rail Half Marathon
Amherst Men's Lacrosse Tops Williams in NCAA Semi-Final
Downtown Pittsfield Inc. Celebrates Successes at Annual Meeting
North Adams Recovery Center Leads With Peer Mentoring
Williams Softball Advances to Division III World Series
Pittsfield Resurfaces Tennis Courts
Congressman Neal Stresses Free Speech at MCLA Commencement

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.




@theMarket (289)
Independent Investor (396)
May 2019 (5)
May 2018 (3)
April 2019 (7)
March 2019 (7)
February 2019 (6)
January 2019 (6)
December 2018 (4)
November 2018 (9)
October 2018 (5)
September 2018 (4)
August 2018 (9)
July 2018 (2)
June 2018 (8)
Debt Ceiling Stocks Election Europe Oil Euro Pullback Fiscal Cliff Federal Reserve Interest Rates Stimulus Europe Currency Congress Taxes Markets Selloff Banks Rally Stock Market Commodities Wall Street Jobs Japan Recession Deficit Economy Greece Debt Bailout Energy Retirement Metals Crisis Housing
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
The Independent Investor: Epidemic Pulls Pork Prices Higher
@theMarket: Tariffs Trash Stocks
The Independent Investor: What Does Your 401(k) Investments Look Like?
@theMarket: New Highs Beget New Highs
The Independent Investor: What You Need to Know (But Don't) About Buying an IPO
The Independent Investor: CBD Is a Real Market
@theMarket: Investors Reach for New Highs
The Independent Investor: The Cost of Rebuilding God's House
@theMarket: Earnings Season Cause Markets to Surge
The Independent Investor: Retirement Savers Could See Positive News This Year (Maybe)