Tariffs Crushing the S&P500

Published date: 10/05/2019
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The almighty trade deal, going back and forth for which seems to be a lifetime. Trump seemingly saying a deal is all but guaranteed and will be signed any day now, but it takes two to tango. The other half of the deal, that being China is on the more hesitant side and not willing to put pen to paper just yet.

Add in the new tariffs confirmed last night, that being an increase from 10% to 25% on $200billion worth of Chinese goods, makes the deal signing all the more interesting now. Just hours after setting a new record high the index is down over 3%. The back and forth “he said this” and “he said that” has really peaked this week, with Trump saying that China broke the deal and the increase in tariffs as a result of this. 

Where does this leave the US indexes? Well for starters, all 3 are down, and at least by 2% on the week or more. The confirmation of 25% tariffs this morning has had a muted effect on the markets when the headline first come across was when we saw the real selling pressure. 

Trump is seen to be more lenient of late, especially relating to IP matters in hopes of getting the deal across the line. There is an old saying in the stock market which goes “Buy the rumour, sell the fact” Meaning buy the asset up until the “said” rumour in question is released. In this instance buy the rumours Trump is feeding you and sell the fact of when the trade deal is released. 

 

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