Home About Archives RSS Feed

@theMarket: Markets Broken Record

By Bill SchmickiBerkshires columnist
As the Dec. 15 deadline approaches, investors aren't sure whether the next tranche of tariffs on Chinese imports will be raised, lowered, or delayed. Given the importance of this event, markets are once again stuck betwixt and between.
 
If this sounds like a broken record on the China trade deal, you would be right. We have been here so many times before that just about everyone in the worldwide financial community is sick of it. Nonetheless, hope springs eternal, or so it would seem, because, many investors still have faith that there will be a breakthrough sometime in the next three weeks.
 
A senior executive of the U.S. Chamber of Commerce, Myron Brilliant, who is head of international affairs for the chamber, isn't holding out much hope. The Chinese, he believes, are adamant that all tariffs must be rolled back before a deal can be struck, while the U.S. is just as insistent that won't happen. At this point, President Trump is now threatening to increase tariffs again if the Chinese won't relent.
 
In addition, it's a bad time for making trade deal decisions. The president is not a happy camper at the moment and everyone in and out of the White House knows by now that emotions play a large part of his decision-making processes. The two-week long televised hearings on the impeachment inquiry, the almost-certainty that the House will vote for impeachment, and the likelihood that this circus will continue into the New Year (before it is defeated by the Republican-controlled Senate) is not, in my opinion, going to lighten his mood.
 
And yet the war of words continues. Friday, President Xi Jinping of China, while greeting some international visitors, including Henry Kissinger, in Beijing, said he wants to come to a phase one agreement as long as the deal is on the basis of mutual respect and equality. The markets immediately moved higher after three days of losses. 
 
While that cheered markets for a short time, the facts are that Xi has been saying the same thing for weeks.  Note the words "respect," which is short for "stop bashing us, our companies, and our handling of the Hong Kong riots, Mr. President."  "Equality" to the Chinese means "the U.S. must rollback its tariffs in exchange for a phase one deal." To me, there is nothing new here, just the same old song with a slightly different beat than last week.
 
As I wrote last in my last column, I have been expecting some congestion in the markets. The China trade charade is simply the excuse. We are overbought and extended, so a little pullback would be a good thing. This week the profit-taking has been minuscule, with the S&P 500 Index down less than 1 percent from the highs. That doesn't mean it won't correct further, but if the majority of market participants are expecting stocks to go one way, the chances are they will go the other way.
 
Let's give things another week or two to shake out before we start looking for that traditional end-of-year rally. Some might say that Santa Claus has already come to Wall Street, filling our stockings with capital gains from all these double-digit returns this year. With the Fed on hold, the economy still growing (even though the rate of growth is slowing), and most analysts and economists optimistic about next year, you could see further gains in the weeks ahead, unless Trump becomes the Grinch that stole Christmas.
 
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
Clarksburg Sees Race for Select Board Seat
Crosby/Conte Statement of Interest Gets OK From Council
WCMA: 'Cracking the Code on Numerology'
BCC Wins Grant for New Automatic External Defibrillator
Clark Art Screens 'Adaptation'
Drury High School to Host End-of-Year Showcase
Clarksburg Gets 3 Years of Free Cash Certified
Pittsfield CPA Committee Funds Half of FY24 Requests
MCLA Men's Lacrosse Falls in League Opener
Letter: Vote for Someone Other Than Trump
 
 


Categories:
@theMarket (480)
Independent Investor (451)
Retired Investor (184)
Archives:
March 2024 (6)
March 2023 (2)
February 2024 (8)
January 2024 (8)
December 2023 (9)
November 2023 (5)
October 2023 (7)
September 2023 (8)
August 2023 (7)
July 2023 (7)
June 2023 (8)
May 2023 (8)
April 2023 (8)
Tags:
Metals Pullback Congress Oil Europe Debt Ceiling Selloff Europe Employment Recession Federal Reserve Rally Markets Currency Election Greece Bailout Banking Jobs Commodities Energy Debt Retirement Economy Euro Crisis Taxes Japan Interest Rates Banks Stock Market Fiscal Cliff Stimulus Deficit Stocks
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
The Retired Investor: Immigrants Getting Bad Rap on the Economic Front
@theMarket: Sticky Inflation Slows Market Advance
The Retired Investor: Eating Out Not What It Used to Be
@theMarket: Markets March to New Highs (Again)
The Retired Investor: Companies Dropping Degree Requirements
@theMarket: Tech Takes Break as Other Sectors Play Catch-up
The Retired Investor: The Economics of Taylor Swift
@theMarket: Nvidia Leads Markets to Record Highs
The Retired Investor: The Chocolate Crisis, or Where Is Willie Wonka When You Need Him
The Retired Investor: Auto Insurance Premiums Keep Rising