Home About Archives RSS Feed

@theMarket: Phase One Deal Keeps Markets Bullish

By Bill SchmickiBerkshires columnist
It was all about the trade deal this week. Both sides seem to want a resolution to the crippling tariffs that have sent the world's economies to the brink of recession. The relief that investors feel is reflected in the new highs we are enjoying at the moment.
 
I say "at the moment" because anything can change with a tweet. However, given the mounting problems of the Trump presidency, I believe he needs something positive (and fairly soon) to divert the nation's attention away from the impeachment hearings next week.
 
Trump appears willing to drop, or at least roll back, some (or all) of the tariffs he put in place, but he can't be seen as too "soft" in the negotiations. That's why it was no surprise that on Friday Trump tweeted that he still has not agreed to grant tariff relief to the China, a sticking point in the negotiations. That took some wind out of the market's sails, but I see it as just more of the same Trump tactics that have become increasingly obvious and predictable.
 
And if I see it, so does China. From their point of view, why not sign a deal? They expect to get everything they want and nothing they don't want. China will allow more financial services companies to set up there, but they were already planning on that before the tariff war. They also get to import all the agricultural products they need, but U.S. farmers will only increase exports back to the level they were before the trade war.  At the same time, the Chinese remain steadfast in not giving in to anything more despite Trump's demands and threats over the last two years.
 
What, you may ask, was the purpose of all this bravado, these tariffs, and such? The administration will say that this is "only" Phase One. The real substantive issues will be tackled "later." No one has issued a timetable on Phase 2 or, if there is one, a Phase 3. China is not giving any indication that they are ready to do more than they have already agreed upon.
 
If it were any other politician but Donald Trump, I would say that further progress on a comprehensive trade deal (that would truly benefit the U.S.) would be tied to the 2020 election results. In the meantime, the president can stump the country, claiming a trade deal victory.
 
Only the fake news could possibly see this Phase One for what it might be — simply a way to keep the suffering farmers and ranchers within the president's base from flying the coop come next November. But, as we all know, our president is not a politician. Our president is an honest, truthful man that is simply misunderstood by the majority of Americans.
 
And China is not the only country that may see some relief from American tariff threats. The president has until Nov. 13 (his self-imposed deadline) to decide whether he will levy additional tariffs on European autos. You see, the president believes that EU auto imports to the U.S. pose a serious security threat. But I'm betting that won't happen. I would expect a surprise announcement to coincide with the televised impeachment hearings next week. As for the security threat, well, that was then, and this is now, right?
 
Where do the markets go from here? I remain bullish, possibly through the end of the year. Saying that, however, I believe we are overdue for a minor pullback of 3-5 percent or so, but it would be a dip to buy, not to sell.
 
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.

 

0 Comments
     

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
Williams Women's Hockey Wins in OT
Mount Holyoke Women Pull Away Late at MCLA
State Police Investigating Death of Individual Found in Pittsfield State Forest
Aluminum Sulfate Spill Closed Route 7 at Vermont Border for 4 Hours
Open House Set Dec. 10 at New Wahconah High
Greenagers Youth Crew to Assess County Bridges and Culverts
Williams Women's Hockey, Basketball Earn Wins
Williamstown's DIRE Committee Looks to Address Elders' Concerns
Pittsfield School Committee Aims to Shorten Meeting Times
Adams Conservation Commission Approves Greylock Glen Outdoor Center Plans
 
 


Categories:
@theMarket (391)
Independent Investor (451)
Retired Investor (69)
Archives:
December 2021 (2)
December 2020 (4)
November 2021 (7)
October 2021 (8)
September 2021 (9)
August 2021 (6)
July 2021 (8)
June 2021 (6)
May 2021 (6)
April 2021 (9)
March 2021 (8)
February 2021 (8)
January 2021 (5)
Tags:
Economy Debt Ceiling Deficit Stock Market Fiscal Cliff Interest Rates Euro Recession Banks Japan Retirement Pullback Selloff Taxes Oil Wall Street Currency Debt Housing Metals Crisis Markets Greece Energy Federal Reserve Election Jobs Commodities Rally Congress Stocks Stimulus Europe Europe Bailout
Popular Entries:
The Retired Investor: The Hawks Return
@theMarket: Markets Get Smacked
The Retired Investor: Thanksgiving Post-Pandemic
The Independent Investor: And Now For That Deficit
The Independent Investor: Don't Fight the Fed
@theMarket: Let the Good Times Roll
@theMarket: The Bottom Is In
@theMarket: Ben Does It Again
@theMarket: Greece — How To Default Without Defaulting
@theMarket: 707 Days
Recent Entries:
@theMarket: Markets Get Smacked
The Retired Investor: The Hawks Return
The Retired Investor: Thanksgiving Post-Pandemic
@theMarket: Market's Week of Indecision
The Retired Investor: The Teacher Shortage
@theMarket: Annual Inflation Hits 30-year Highs
The Retired Investor: SALT Away?
The Retired Investor: Vicious Cycle Between Energy & Food Prices
@theMarket: Markets Get a Green Light
@theMarket: Good Earnings Support Markets