Sometimes it's good to zoom out for perspective, given all the craziness in the market and media. We've had a wild ride on top of cheap money since the global collapse in 2008. That ride was beginning to stall until Trump's election and the exuberance (rational or irrational) that followed based on pro-big business policy expectations. This all came to a screeching halt as soon as the trade war began escalating and monetary policy tightening moved into a higher gear.
Now that the trade talks have failed (again), the economy is starting to see fundamental impacts as a result of tariffs and the tapering off of the tax cut stimulus. In addition, the so-called "full" employment we're in is not yielding higher inflation as expected (as tracked by the Fed), so markets are uncertain as to whether interest rates will be cut or continue to rise in the near future. In addition, although the unemployment rate is at historical lows, most Americans (and American corporations) are even more heavy in debt than pre-2008, and yet one disaster away from financial ruin.
If a trade deal is struck or if talks resume (which looks increasingly unlikely given the demands of the Trump administration on Chinese economic/political fundamentals), the market may recover quickly from this latest downturn. But I still feel we've hit a pretty hard resistance around $26.8k. We've now seen a triple-top in the DJI, which could signal a major move downwards. Technical analysis aside, the Chinese government has signaled to the US that it is ready and willing to retaliate through its rare earth exports (of which it dominates global markets), currency devaluation, and/or US Treasury sell-off. These would be painful for both the US and China, so the likelihood is still somewhat remote but that changes every time tariffs are imposed or increased.
I'm sitting on cash from this point when it comes to equities. I'm also hedging through alternative assets (like cryptocurrency and potentially gold). As Led Zeppelin once sang; "If it keeps on rainin' levee's gonna break...."
HecknDoggo
Now that the trade talks have failed (again), the economy is starting to see fundamental impacts as a result of tariffs and the tapering off of the tax cut stimulus. In addition, the so-called "full" employment we're in is not yielding higher inflation as expected (as tracked by the Fed), so markets are uncertain as to whether interest rates will be cut or continue to rise in the near future. In addition, although the unemployment rate is at historical lows, most Americans (and American corporations) are even more heavy in debt than pre-2008, and yet one disaster away from financial ruin.
If a trade deal is struck or if talks resume (which looks increasingly unlikely given the demands of the Trump administration on Chinese economic/political fundamentals), the market may recover quickly from this latest downturn. But I still feel we've hit a pretty hard resistance around $26.8k. We've now seen a triple-top in the DJI, which could signal a major move downwards. Technical analysis aside, the Chinese government has signaled to the US that it is ready and willing to retaliate through its rare earth exports (of which it dominates global markets), currency devaluation, and/or US Treasury sell-off. These would be painful for both the US and China, so the likelihood is still somewhat remote but that changes every time tariffs are imposed or increased.
I'm sitting on cash from this point when it comes to equities. I'm also hedging through alternative assets (like cryptocurrency and potentially gold). As Led Zeppelin once sang; "If it keeps on rainin' levee's gonna break...."
HecknDoggo
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.