Friday, December 07, 2018

Trying To Make Sense Of China/US Trade Issues

What seems to be influencing the market the most at the moment is the trade issues with China and the U.S. Jeff Miller who writes at the Dash of Insight blog published a short article yesterday that seems to get to some of the main issues surrounding trade and the equity markets. A couple of highlights from the article follow, but the entire post is a worthwhile read. Jeff notes the market's reaction is,
"a typical example of the trading community’s failure to understand politics, negotiation, and compromise. I have highlighted this before on issues like Greece and the asserted collapse of Europe and concerning various US policy debates."
He notes further,
Here is what to expect:
  • Decades of history will not be reversed in a few months. Be happy for some progress.
  • The outcome will be a compromise. It will not be a complete success for either side, but each will trumpet what they have accomplished.
  • Nothing big will happen until the last minute. This is the way that partisans demonstrate they have accomplished as much as possible.
  • Eventual relief on the most important reciprocal tariffs.
  • Some progress on the intellectual property issues.
  • Some immediate relief on existing boycotts, e.g. soybeans.
The entire post can be read here: China/US Trade – Finding a Signal Amidst the Noise

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