The Market Takes Trump in Stride
Trump's speech yesterday was bellicose and threatening. If this was 2 months ago, it would have cratered the market. He threatened to raise tariffs if there was no agreement, and by stating that "if there was no agreement," it meant that Phase 1 was not baked into the cake. Remember when the deal was announced with great fanfare? All it needed, and I am quoting the "dealmaker-in-chief" was that the agreement needed to be "papered".
What did the market do? Surprisingly or actually not (at least to this observer) it closed flat yesterday, and after weakness this morning coming in from Europe and Asia influencing our futures, the market is continuing higher. There are two theories:
Theory 1: Trump is just being Trump, the Chinese are dithering and stalling. They want some good faith reduction in current tariffs and not just rescinding the next tranche of tariffs on December 15.
The White House is divided into 2 factions. Those who want to get any kind of deal on the books and then do the heavy lifting into next year at the height of the election campaign. They want a win now.
The other faction is the trade war hawks that don't care if the stock market sells off and argues that Phase 1 is the most important step. In this theory, logic will win out, and there will be a deal no matter what because both sides need it.
The market is wisely discounting that a deal will happen by looking through the current static to see a positive end result.
Theory 2: The market is bored with the whole thing by now. In the teeth of this scare, the US is doing just fine, and the consumer is rocking.
In this scenario, the market
