Bill Poulos is a financial educator with over forty-five years of experience investing in the markets. He is the President and Co-founder of the publishing company, Profits Run, Inc. The company supplies investment materials to over 100,000 members in more than 150 countries. Profits Run educates individuals on making wise investments with minimal risk with their Programs, like 20/30 Wealth Trader and Instant Wealth Trader. Bill Poulos shares his knowledge with his online community with articles like, Bill Poulos, Founder of Profits Run, Reveals How to Approach Trading in the Holiday Market. Bill has been happily married to his high school sweetheart for 50 years. They live in Wixom, Michigan where Profits Run is located. Below, he discusses the latest with Trump’s Tariffs and the trade war.
The market is back to its winning ways, just like that. Earlier this week the U.S. made an announcement that the September tariffs on hot-ticket items (like clothing and smartphones) would be delayed until December, and that for some goods the tariffs would be removed altogether.
This is yet another shocking twist in the continuing trade war saga — one that had investors worrying about additional escalations.
But President Trump has a new agenda now.
Which Mad Money’s Jim Cramer says, happened for one reason:
“I think this is the president saying, ‘I don’t want the stock market to go down anymore and this is traumatic.’”
Even better, in another announcement this morning, Chinese officials said they had a phone call about trade terms with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
“Everybody blinked,” Cramer relayed.
“This is exactly what the bears’ worst nightmare is.”
And as of midday Tuesday, it really is a bad time for bears. After opening today’s trading session on the low side, the Dow (+1.60%), S&P (+1.65%), and Nasdaq Composite (+1.90%) all shot upwards.
Cramer, who’s proved in the past that his finger is firmly placed on the pulse of the market, might be correct in his assumption that Trump merely wanted stocks to rise.
But the official reasoning behind Trump’s tariff delay is entirely something else, in addition to being a surprise to analysts.
“We’re doing this for the Christmas season,” Trump explained to reporters.
“Just in case some of the tariffs would have an impact on U.S. customers. But so far they’ve had virtually none.”
So though the trade war is not over by any means, we’re at the very least witnessing a de-escalation.
Which is providing a pleasant reprieve to plagued investors.
But there’s still plenty of fear to go around, outside of equities. Analysts are feeling nervous about the far less “sexy” bond markets.
“I think there’s a lot of fear embedded in the bond market,” chief investment strategist Jim Paulsen of The Leuthold Group admitted.
“[The inverted yield curve] is the biggest risk right now. It’s my number one worry but I think it’s overdone. If economic reports continue to improve, then I think people will decide this doesn’t look like a recession.”
“The fact that we have negative yields around the world makes this somewhat a different signal. The fact we inverted on underheat rather than the normal inversion on overheat makes it somewhat different.”
Paulsen’s statement raises a great point.
Yes, we do have an inverted yield curve.
But, it’s occurred during a time where the economy has continued to show signs of moderate strength.
If quarter-after-quarter investors keep seeing economic growth, not only will we stave off a recession, but equities may be able to avoid a major correction, too.
Even in the event that the U.S. and China are still stuck in the trade war.
This doesn’t translate as the time between the present and the December tariffs will be 100% positive for the market, though. Protests in Hong Kong have tensions high and China is bound to manipulate its currency again.
As of Tuesday morning, the yuan midpoint was dropped to 7.0326 per U.S. dollar, teetering just below the mental 7-yuan-per-dollar point. The market plunged the last time that happened.
Though the devaluation of the yuan really doesn’t matter.
Because as far as investors are concerned, Trump saved Christmas, and it’s time to celebrate.