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.

 

     

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
Scoil Rince Bréifne Ó Ruairc Participated in North American Open Championships
Pittsfield Police Participating in US 20 Speed Enforcement Project
MassDOT Project Will Affect Traffic Near BMC
Dalton ADA Committee Explores Expanding
Milne Public Library Trustees Announce New Library Director
Clark Art Presents Free Thematic Tour on Music in Art
BCC, Mill Town Partner to Support Philanthropy Through 40 Under Forty
SVMC' Wellness Connection: March 15
Pittsfield Community Meeting On Rest of the River Project
Slavic Easter Egg Decorating At Ventfort Hall
 
 


Categories:
@theMarket (480)
Independent Investor (451)
Retired Investor (183)
Archives:
March 2024 (5)
March 2023 (4)
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:
Greece Banking Euro Metals Pullback Federal Reserve Taxes Retirement Employment Stocks Stock Market Crisis Economy Oil Congress Markets Europe Bailout Deficit Banks Energy Fiscal Cliff Recession Currency Japan Commodities Europe Rally Interest Rates Election Debt Ceiling Stimulus Selloff Debt Jobs
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:
@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
@theMarket: Melt-up in Markets Fueled by Momentum