Home About Archives RSS Feed

@theMarket: Markets Broken Record

By Bill Schmick
iBerkshires 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.

 

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
Community Recreation Association to Hold Food Drive
BCArc Names New Director of Employment Services
StoryWalk In Williamstown
Adams Officials Seeking Safe Way to Celebrate Halloween
Williamstown Fire District Signs Deal on Tanker Truck
Adams Board of Health Address Open Meeting Law Complaint
Pownal Race Track Fire Deemed Suspicious; Authorities Seeking Information
Pittsfield Native Promoted to Air force Brigadier General
Baker: Getting a Flu Shot Shows Support for Health Care Workers
Berkshire Museum Offers Virtual After School Program
 


Categories:
@theMarket (342)
Independent Investor (450)
Retired Investor (13)
Archives:
September 2020 (3)
September 2019 (3)
August 2020 (6)
July 2020 (10)
June 2020 (7)
May 2020 (9)
April 2020 (9)
March 2020 (5)
February 2020 (7)
January 2020 (10)
December 2019 (7)
November 2019 (8)
October 2019 (9)
Tags:
Japan Jobs Europe Currency Rally Retirement Fiscal Cliff Stimulus Economy Metals Europe Recession Interest Rates Energy Stocks Election Commodities Markets Debt Banks Congress Deficit Wall Street Bailout Greece Euro Federal Reserve Housing Selloff Crisis Debt Ceiling Pullback Stock Market Oil Taxes
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: Markets Are Going Higher
The Independent Investor: Does Cash Mean Currencies?
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 Retired Investor: Bicycles Sales Are Booming
The Retired Investor: CSAs & Local Farms Make a Comeback
The Retired Investor: Mask Mania Helps Small Business
@theMarket: Markets Reach for the Sky
The Retired Investor: The Drive-In Returns
@theMarket: Market's Window Getting Smaller
The Retired Investor: Home Is Where the Hammer Is
@theMarket: The Economy Versus the Stock Market
The Retired Investor: Tensions With China May Heat Up
@theMarket: Stocks Fall as Congress Fails to Act