iStock.com/Paperkites Stock Market at a Dangerous Crossroads
It has become increasingly frustrating to witness the resurfacing of selling capitulation in the stock market in what has so far been a hazardous year for bulls.
But while I’m not ready to throw in the towel and accept that the bulls are losing steam, I do feel the easy money in the stock market has already run its course.
We could see another year or so of upside moves in the stock market, but the increased macro uncertainties will surely make it difficult to not want to give in.
Here’s what is at stake at this time:
China Deal or No Deal Yield Curve Inversion Tariff War
The stock market applauded after President Donald Trump and President Xi Jinping decided on a trade war ceasefire at the G20 meetings.
The problem is there was a lack of details on the actual agreement. Trump subsequently admitted there was no formal deal except a 90-day window for negotiations between the world’s two biggest economies.
….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN
— Donald J. Trump (@realDonaldTrump) December 4, 2018
Trump later referred to himself as a “Tariff Man” and the stock market grew despondent and threw up. The Dow cratered around 1,600 points on Tuesday, December 4 and its low point on Thursday, December 6. The Nasdaq broke below 7,000 intraday on Thursday.
Chart courtesy of StockCharts.com
But the tariffs don’t appear to be working as the U.S. trade deficit with